Correlation Between Gaztransport Technigaz and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Gaztransport Technigaz 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 Gaztransport Technigaz and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaztransport Technigaz SA and Beazer Homes USA, you can compare the effects of market volatilities on Gaztransport Technigaz 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 Gaztransport Technigaz with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport Technigaz and Beazer Homes.
Diversification Opportunities for Gaztransport Technigaz and Beazer Homes
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gaztransport and Beazer is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA 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 Gaztransport Technigaz 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 Gaztransport Technigaz SA 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 Gaztransport Technigaz i.e., Gaztransport Technigaz and Beazer Homes go up and down completely randomly.
Pair Corralation between Gaztransport Technigaz and Beazer Homes
Assuming the 90 days horizon Gaztransport Technigaz is expected to generate 2.85 times less return on investment than Beazer Homes. But when comparing it to its historical volatility, Gaztransport Technigaz SA is 1.76 times less risky than Beazer Homes. It trades about 0.05 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,220 in Beazer Homes USA on September 13, 2024 and sell it today you would earn a total of 1,840 from holding Beazer Homes USA or generate 150.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaztransport Technigaz SA vs. Beazer Homes USA
Performance |
| Timeline |
| Gaztransport Technigaz |
| Beazer Homes USA |
Gaztransport Technigaz and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaztransport Technigaz and Beazer Homes
The main advantage of trading using opposite Gaztransport Technigaz and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport Technigaz 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.| Gaztransport Technigaz vs. Tenaris SA | Gaztransport Technigaz vs. NOV Inc | Gaztransport Technigaz vs. Superior Plus Corp | Gaztransport Technigaz vs. SIVERS SEMICONDUCTORS AB |
| Beazer Homes vs. Gaztransport Technigaz SA | Beazer Homes vs. Texas Roadhouse | Beazer Homes vs. Tyson Foods | Beazer Homes vs. VARIOUS EATERIES LS |
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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