Correlation Between Beazer Homes and Canadian General
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Canadian General at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Beazer Homes and Canadian General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beazer Homes USA and Canadian General Investments, you can compare the effects of market volatilities on Beazer Homes and Canadian General and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Beazer Homes with a short position of Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Canadian General.
Diversification Opportunities for Beazer Homes and Canadian General
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Beazer and Canadian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv and Beazer Homes is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Beazer Homes USA are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Beazer Homes i.e., Beazer Homes and Canadian General go up and down completely randomly.
Pair Corralation between Beazer Homes and Canadian General
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 3.07 times more return on investment than Canadian General. However, Beazer Homes is 3.07 times more volatile than Canadian General Investments. It trades about 0.07 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.04 per unit of risk. If you would invest 1,517 in Beazer Homes USA on October 11, 2024 and sell it today you would earn a total of 1,108 from holding Beazer Homes USA or generate 73.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 59.15% |
| Values | Daily Returns |
Beazer Homes USA vs. Canadian General Investments
Performance |
| Timeline |
| Beazer Homes USA |
| Canadian General Inv |
Beazer Homes and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Canadian General
The main advantage of trading using opposite Beazer Homes and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Canadian General can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canadian General will offset losses from the drop in Canadian General's long position.| Beazer Homes vs. Centaur Media | Beazer Homes vs. Intermediate Capital Group | Beazer Homes vs. EJF Investments | Beazer Homes vs. Lindsell Train Investment |
| Canadian General vs. Associated British Foods | Canadian General vs. Travel Leisure Co | Canadian General vs. Beazer Homes USA | Canadian General vs. bet at home AG |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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