Correlation Between Beazer Homes and National Atomic
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and National Atomic 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 National Atomic 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 National Atomic Co, you can compare the effects of market volatilities on Beazer Homes and National Atomic 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 National Atomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and National Atomic.
Diversification Opportunities for Beazer Homes and National Atomic
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beazer and National is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and National Atomic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Atomic 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 National Atomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Atomic has no effect on the direction of Beazer Homes i.e., Beazer Homes and National Atomic go up and down completely randomly.
Pair Corralation between Beazer Homes and National Atomic
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 2.03 times more return on investment than National Atomic. However, Beazer Homes is 2.03 times more volatile than National Atomic Co. It trades about 0.09 of its potential returns per unit of risk. National Atomic Co is currently generating about 0.12 per unit of risk. If you would invest 3,275 in Beazer Homes USA on September 3, 2024 and sell it today you would earn a total of 230.00 from holding Beazer Homes USA or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 62.79% |
| Values | Daily Returns |
Beazer Homes USA vs. National Atomic Co
Performance |
| Timeline |
| Beazer Homes USA |
| National Atomic |
Beazer Homes and National Atomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and National Atomic
The main advantage of trading using opposite Beazer Homes and National Atomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, National Atomic 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 National Atomic will offset losses from the drop in National Atomic's long position.| Beazer Homes vs. Herald Investment Trust | Beazer Homes vs. New Residential Investment | Beazer Homes vs. Hansa Investment | Beazer Homes vs. Veolia Environnement VE |
| National Atomic vs. Fevertree Drinks Plc | National Atomic vs. Supermarket Income REIT | National Atomic vs. Beazer Homes USA | National Atomic vs. Ecclesiastical Insurance Office |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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