Correlation Between Beazer Homes and North Atlantic
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and North Atlantic 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 North Atlantic 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 North Atlantic Smaller, you can compare the effects of market volatilities on Beazer Homes and North Atlantic 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 North Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and North Atlantic.
Diversification Opportunities for Beazer Homes and North Atlantic
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beazer and North is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and North Atlantic Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Atlantic Smaller 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 North Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Atlantic Smaller has no effect on the direction of Beazer Homes i.e., Beazer Homes and North Atlantic go up and down completely randomly.
Pair Corralation between Beazer Homes and North Atlantic
Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the North Atlantic. In addition to that, Beazer Homes is 2.74 times more volatile than North Atlantic Smaller. It trades about -0.08 of its total potential returns per unit of risk. North Atlantic Smaller is currently generating about -0.1 per unit of volatility. If you would invest 385,000 in North Atlantic Smaller on September 19, 2024 and sell it today you would lose (8,000) from holding North Atlantic Smaller or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
Beazer Homes USA vs. North Atlantic Smaller
Performance |
| Timeline |
| Beazer Homes USA |
| North Atlantic Smaller |
Beazer Homes and North Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and North Atlantic
The main advantage of trading using opposite Beazer Homes and North Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, North Atlantic 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 North Atlantic will offset losses from the drop in North Atlantic's long position.| Beazer Homes vs. Eastman Chemical Co | Beazer Homes vs. Spirent Communications plc | Beazer Homes vs. Liontrust Asset Management | Beazer Homes vs. Charter Communications Cl |
| North Atlantic vs. DXC Technology Co | North Atlantic vs. American Homes 4 | North Atlantic vs. Beazer Homes USA | North Atlantic vs. Synthomer plc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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