Correlation Between Beazer Homes and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Playtech Plc 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 Playtech Plc 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 Playtech Plc, you can compare the effects of market volatilities on Beazer Homes and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Playtech Plc.
Diversification Opportunities for Beazer Homes and Playtech Plc
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beazer and Playtech is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Playtech Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech Plc has no effect on the direction of Beazer Homes i.e., Beazer Homes and Playtech Plc go up and down completely randomly.
Pair Corralation between Beazer Homes and Playtech Plc
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 5.42 times more return on investment than Playtech Plc. However, Beazer Homes is 5.42 times more volatile than Playtech Plc. It trades about 0.23 of its potential returns per unit of risk. Playtech Plc is currently generating about -0.04 per unit of risk. If you would invest 3,034 in Beazer Homes USA on August 27, 2024 and sell it today you would earn a total of 340.00 from holding Beazer Homes USA or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.9% |
| Values | Daily Returns |
Beazer Homes USA vs. Playtech Plc
Performance |
| Timeline |
| Beazer Homes USA |
| Playtech Plc |
Beazer Homes and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Playtech Plc
The main advantage of trading using opposite Beazer Homes and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.| Beazer Homes vs. Liberty Media Corp | Beazer Homes vs. XLMedia PLC | Beazer Homes vs. Fevertree Drinks Plc | Beazer Homes vs. LBG Media PLC |
| Playtech Plc vs. Samsung Electronics Co | Playtech Plc vs. Samsung Electronics Co | Playtech Plc vs. Toyota Motor Corp | Playtech Plc vs. Hon Hai Precision |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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