Correlation Between BE Semiconductor and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor 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 BE Semiconductor and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and Beazer Homes USA, you can compare the effects of market volatilities on BE Semiconductor 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 BE Semiconductor with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Beazer Homes.
Diversification Opportunities for BE Semiconductor and Beazer Homes
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0XVE and Beazer is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries 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 BE Semiconductor 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 BE Semiconductor Industries 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 BE Semiconductor i.e., BE Semiconductor and Beazer Homes go up and down completely randomly.
Pair Corralation between BE Semiconductor and Beazer Homes
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 0.91 times more return on investment than Beazer Homes. However, BE Semiconductor Industries is 1.1 times less risky than Beazer Homes. It trades about 0.08 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.01 per unit of risk. If you would invest 11,210 in BE Semiconductor Industries on September 12, 2024 and sell it today you would earn a total of 1,415 from holding BE Semiconductor Industries or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 64.62% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Beazer Homes USA
Performance |
| Timeline |
| BE Semiconductor Ind |
| Beazer Homes USA |
BE Semiconductor and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Beazer Homes
The main advantage of trading using opposite BE Semiconductor and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor 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.| BE Semiconductor vs. Symphony Environmental Technologies | BE Semiconductor vs. Take Two Interactive Software | BE Semiconductor vs. TechnipFMC PLC | BE Semiconductor vs. Vitec Software Group |
| Beazer Homes vs. Samsung Electronics Co | Beazer Homes vs. Samsung Electronics Co | Beazer Homes vs. Hyundai Motor | Beazer Homes vs. Reliance Industries Ltd |
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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