Correlation Between CNH Industrial and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both CNH Industrial 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 CNH Industrial and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Beazer Homes USA, you can compare the effects of market volatilities on CNH Industrial 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 CNH Industrial with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Beazer Homes.
Diversification Opportunities for CNH Industrial and Beazer Homes
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CNH and Beazer is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV 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 CNH Industrial 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 CNH Industrial NV 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 CNH Industrial i.e., CNH Industrial and Beazer Homes go up and down completely randomly.
Pair Corralation between CNH Industrial and Beazer Homes
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 0.72 times more return on investment than Beazer Homes. However, CNH Industrial NV is 1.39 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 0.0 per unit of risk. If you would invest 1,055 in CNH Industrial NV on October 21, 2024 and sell it today you would earn a total of 0.00 from holding CNH Industrial NV or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.68% |
| Values | Daily Returns |
CNH Industrial NV vs. Beazer Homes USA
Performance |
| Timeline |
| CNH Industrial NV |
| Beazer Homes USA |
CNH Industrial and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Beazer Homes
The main advantage of trading using opposite CNH Industrial and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial 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.| CNH Industrial vs. Axway Software SA | CNH Industrial vs. Check Point Software | CNH Industrial vs. Take Two Interactive Software | CNH Industrial vs. Austevoll Seafood ASA |
| Beazer Homes vs. Smithson Investment Trust | Beazer Homes vs. PPHE Hotel Group | Beazer Homes vs. Melia Hotels | Beazer Homes vs. EJF Investments |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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