Correlation Between Beazer Homes and Ceres Power
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Ceres Power 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 Ceres Power 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 Ceres Power Holdings, you can compare the effects of market volatilities on Beazer Homes and Ceres Power 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 Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Ceres Power.
Diversification Opportunities for Beazer Homes and Ceres Power
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beazer and Ceres is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings 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 Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of Beazer Homes i.e., Beazer Homes and Ceres Power go up and down completely randomly.
Pair Corralation between Beazer Homes and Ceres Power
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 0.83 times more return on investment than Ceres Power. However, Beazer Homes USA is 1.2 times less risky than Ceres Power. It trades about 0.01 of its potential returns per unit of risk. Ceres Power Holdings is currently generating about -0.04 per unit of risk. If you would invest 1,987 in Beazer Homes USA on January 15, 2025 and sell it today you would lose (194.00) from holding Beazer Homes USA or give up 9.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 62.12% |
| Values | Daily Returns |
Beazer Homes USA vs. Ceres Power Holdings
Performance |
| Timeline |
| Beazer Homes USA |
| Ceres Power Holdings |
Beazer Homes and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Ceres Power
The main advantage of trading using opposite Beazer Homes and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Ceres Power 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 Ceres Power will offset losses from the drop in Ceres Power's long position.| Beazer Homes vs. Samsung Electronics Co | Beazer Homes vs. Samsung Electronics Co | Beazer Homes vs. Samsung Electronics Co | Beazer Homes vs. Toyota Motor Corp |
| Ceres Power vs. Edinburgh Investment Trust | Ceres Power vs. Metals Exploration Plc | Ceres Power vs. Capital Metals PLC | Ceres Power vs. Wheaton Precious Metals |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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