Correlation Between Beazer Homes and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Beazer Homes and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Dow Jones.
Diversification Opportunities for Beazer Homes and Dow Jones
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beazer and Dow is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Beazer Homes i.e., Beazer Homes and Dow Jones go up and down completely randomly.
Pair Corralation between Beazer Homes and Dow Jones
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 5.7 times more return on investment than Dow Jones. However, Beazer Homes is 5.7 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 1,364 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 2,152 from holding Beazer Homes USA or generate 157.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 57.37% |
| Values | Daily Returns |
Beazer Homes USA vs. Dow Jones Industrial
Performance |
| Timeline |
Beazer Homes and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Beazer Homes USA
Pair trading matchups for Beazer Homes
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Beazer Homes and Dow Jones
The main advantage of trading using opposite Beazer Homes and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Beazer Homes vs. Lendinvest PLC | Beazer Homes vs. Neometals | Beazer Homes vs. Albion Technology General | Beazer Homes vs. Jupiter Fund Management |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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