Correlation Between Fortune Brands and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Fortune Brands 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 Fortune Brands and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Brands Home and Beazer Homes USA, you can compare the effects of market volatilities on Fortune Brands 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 Fortune Brands with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Beazer Homes.
Diversification Opportunities for Fortune Brands and Beazer Homes
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortune and Beazer is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home 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 Fortune Brands 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 Fortune Brands Home 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 Fortune Brands i.e., Fortune Brands and Beazer Homes go up and down completely randomly.
Pair Corralation between Fortune Brands and Beazer Homes
Assuming the 90 days trading horizon Fortune Brands is expected to generate 20.16 times less return on investment than Beazer Homes. But when comparing it to its historical volatility, Fortune Brands Home is 1.74 times less risky than Beazer Homes. It trades about 0.01 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,114 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 402.00 from holding Beazer Homes USA or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.55% |
| Values | Daily Returns |
Fortune Brands Home vs. Beazer Homes USA
Performance |
| Timeline |
| Fortune Brands Home |
| Beazer Homes USA |
Fortune Brands and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Beazer Homes
The main advantage of trading using opposite Fortune Brands and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands 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.| Fortune Brands vs. Wheaton Precious Metals | Fortune Brands vs. MTI Wireless Edge | Fortune Brands vs. Jacquet Metal Service | Fortune Brands vs. Capital Metals PLC |
| Beazer Homes vs. Cognizant Technology Solutions | Beazer Homes vs. Spotify Technology SA | Beazer Homes vs. Sunny Optical Technology | Beazer Homes vs. Ashtead Technology Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |