Correlation Between Beazer Homes and Eneraqua Technologies
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Eneraqua Technologies 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 Eneraqua Technologies 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 Eneraqua Technologies PLC, you can compare the effects of market volatilities on Beazer Homes and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Eneraqua Technologies.
Diversification Opportunities for Beazer Homes and Eneraqua Technologies
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beazer and Eneraqua is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies PLC 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Beazer Homes i.e., Beazer Homes and Eneraqua Technologies go up and down completely randomly.
Pair Corralation between Beazer Homes and Eneraqua Technologies
Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the Eneraqua Technologies. In addition to that, Beazer Homes is 1.55 times more volatile than Eneraqua Technologies PLC. It trades about -0.04 of its total potential returns per unit of risk. Eneraqua Technologies PLC is currently generating about 0.0 per unit of volatility. If you would invest 4,120 in Eneraqua Technologies PLC on October 26, 2024 and sell it today you would lose (120.00) from holding Eneraqua Technologies PLC or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 63.2% |
| Values | Daily Returns |
Beazer Homes USA vs. Eneraqua Technologies PLC
Performance |
| Timeline |
| Beazer Homes USA |
| Eneraqua Technologies PLC |
Beazer Homes and Eneraqua Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Eneraqua Technologies
The main advantage of trading using opposite Beazer Homes and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.| Beazer Homes vs. Zegona Communications Plc | Beazer Homes vs. Fonix Mobile plc | Beazer Homes vs. Geely Automobile Holdings | Beazer Homes vs. Evolution Gaming Group |
| Eneraqua Technologies vs. Beazer Homes USA | Eneraqua Technologies vs. Home Depot | Eneraqua Technologies vs. HCA Healthcare | Eneraqua Technologies vs. UNIQA Insurance Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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