Correlation Between ONEOK and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both ONEOK 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 ONEOK and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Beazer Homes USA, you can compare the effects of market volatilities on ONEOK 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 ONEOK with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Beazer Homes.
Diversification Opportunities for ONEOK and Beazer Homes
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ONEOK and Beazer is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc 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 ONEOK 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 ONEOK Inc 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 ONEOK i.e., ONEOK and Beazer Homes go up and down completely randomly.
Pair Corralation between ONEOK and Beazer Homes
Assuming the 90 days trading horizon ONEOK Inc is expected to generate 0.33 times more return on investment than Beazer Homes. However, ONEOK Inc is 3.0 times less risky than Beazer Homes. It trades about -0.1 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.17 per unit of risk. If you would invest 10,245 in ONEOK Inc on November 4, 2024 and sell it today you would lose (416.00) from holding ONEOK Inc or give up 4.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.27% |
| Values | Daily Returns |
ONEOK Inc vs. Beazer Homes USA
Performance |
| Timeline |
| ONEOK Inc |
| Beazer Homes USA |
ONEOK and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Beazer Homes
The main advantage of trading using opposite ONEOK and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK 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.| ONEOK vs. Universal Display Corp | ONEOK vs. Playtech Plc | ONEOK vs. Cairn Homes PLC | ONEOK vs. Cairo Communication SpA |
| Beazer Homes vs. GoldMining | Beazer Homes vs. Alfa Financial Software | Beazer Homes vs. Bloomsbury Publishing Plc | Beazer Homes vs. Lundin Mining Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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