Correlation Between CVR Energy and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Beazer Homes 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 CVR Energy and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Beazer Homes USA, you can compare the effects of market volatilities on CVR Energy and Beazer Homes 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 CVR Energy with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Beazer Homes.
Diversification Opportunities for CVR Energy and Beazer Homes
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVR and Beazer is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA and CVR Energy 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 CVR Energy are associated (or correlated) with Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of CVR Energy i.e., CVR Energy and Beazer Homes go up and down completely randomly.
Pair Corralation between CVR Energy and Beazer Homes
Assuming the 90 days trading horizon CVR Energy is expected to generate 2.07 times less return on investment than Beazer Homes. In addition to that, CVR Energy is 1.12 times more volatile than Beazer Homes USA. It trades about 0.11 of its total potential returns per unit of risk. Beazer Homes USA is currently generating about 0.26 per unit of volatility. If you would invest 3,034 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 482.00 from holding Beazer Homes USA or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
CVR Energy vs. Beazer Homes USA
Performance |
| Timeline |
| CVR Energy |
| Beazer Homes USA |
CVR Energy and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Beazer Homes
The main advantage of trading using opposite CVR Energy and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Beazer Homes 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.| CVR Energy vs. Bytes Technology | CVR Energy vs. DXC Technology Co | CVR Energy vs. United Airlines Holdings | CVR Energy vs. Check Point Software |
| Beazer Homes vs. GreenX Metals | Beazer Homes vs. Jacquet Metal Service | Beazer Homes vs. Futura Medical | Beazer Homes vs. Kaufman Et Broad |
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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