Correlation Between Sealed Air and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Sealed Air 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 Sealed Air and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air Corp and Beazer Homes USA, you can compare the effects of market volatilities on Sealed Air 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 Sealed Air with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Beazer Homes.
Diversification Opportunities for Sealed Air and Beazer Homes
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sealed and Beazer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp 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 Sealed Air 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 Sealed Air Corp 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 Sealed Air i.e., Sealed Air and Beazer Homes go up and down completely randomly.
Pair Corralation between Sealed Air and Beazer Homes
Assuming the 90 days trading horizon Sealed Air Corp is expected to generate 1.14 times more return on investment than Beazer Homes. However, Sealed Air is 1.14 times more volatile than Beazer Homes USA. It trades about -0.24 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.48 per unit of risk. If you would invest 3,609 in Sealed Air Corp on October 13, 2024 and sell it today you would lose (237.00) from holding Sealed Air Corp or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 55.56% |
| Values | Daily Returns |
Sealed Air Corp vs. Beazer Homes USA
Performance |
| Timeline |
| Sealed Air Corp |
| Beazer Homes USA |
Sealed Air and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Beazer Homes
The main advantage of trading using opposite Sealed Air and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.| Sealed Air vs. Infrastrutture Wireless Italiane | Sealed Air vs. AcadeMedia AB | Sealed Air vs. MTI Wireless Edge | Sealed Air vs. Ubisoft Entertainment |
| Beazer Homes vs. Alaska Air Group | Beazer Homes vs. Sealed Air Corp | Beazer Homes vs. Austevoll Seafood ASA | Beazer Homes vs. Dairy Farm International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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