Correlation Between Beazer Homes and Henderson High
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Henderson High 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 Henderson High 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 Henderson High Income, you can compare the effects of market volatilities on Beazer Homes and Henderson High 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 Henderson High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Henderson High.
Diversification Opportunities for Beazer Homes and Henderson High
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beazer and Henderson is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Henderson High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson High Income 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 Henderson High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson High Income has no effect on the direction of Beazer Homes i.e., Beazer Homes and Henderson High go up and down completely randomly.
Pair Corralation between Beazer Homes and Henderson High
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 2.33 times more return on investment than Henderson High. However, Beazer Homes is 2.33 times more volatile than Henderson High Income. It trades about 0.07 of its potential returns per unit of risk. Henderson High Income is currently generating about 0.0 per unit of risk. If you would invest 2,724 in Beazer Homes USA on October 25, 2024 and sell it today you would earn a total of 44.00 from holding Beazer Homes USA or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.42% |
| Values | Daily Returns |
Beazer Homes USA vs. Henderson High Income
Performance |
| Timeline |
| Beazer Homes USA |
| Henderson High Income |
Beazer Homes and Henderson High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Henderson High
The main advantage of trading using opposite Beazer Homes and Henderson High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Henderson High 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 Henderson High will offset losses from the drop in Henderson High's long position.| Beazer Homes vs. Toyota Motor Corp | Beazer Homes vs. SoftBank Group Corp | Beazer Homes vs. OTP Bank Nyrt | Beazer Homes vs. ONEOK Inc |
| Henderson High vs. DFS Furniture PLC | Henderson High vs. Taiwan Semiconductor Manufacturing | Henderson High vs. Coeur Mining | Henderson High vs. Beazer Homes USA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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