Correlation Between Albion Technology and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Albion Technology 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 Albion Technology and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albion Technology General and Beazer Homes USA, you can compare the effects of market volatilities on Albion Technology 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 Albion Technology with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albion Technology and Beazer Homes.
Diversification Opportunities for Albion Technology and Beazer Homes
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Albion and Beazer is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Albion Technology General 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 Albion Technology 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 Albion Technology General 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 Albion Technology i.e., Albion Technology and Beazer Homes go up and down completely randomly.
Pair Corralation between Albion Technology and Beazer Homes
Assuming the 90 days trading horizon Albion Technology General is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, Albion Technology General is 2.8 times less risky than Beazer Homes. The stock trades about -0.05 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,136 in Beazer Homes USA on September 1, 2024 and sell it today you would earn a total of 369.00 from holding Beazer Homes USA or generate 11.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 68.18% |
| Values | Daily Returns |
Albion Technology General vs. Beazer Homes USA
Performance |
| Timeline |
| Albion Technology General |
| Beazer Homes USA |
Albion Technology and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albion Technology and Beazer Homes
The main advantage of trading using opposite Albion Technology and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albion Technology 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.| Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Toyota Motor Corp | Albion Technology vs. Reliance Industries Ltd |
| Beazer Homes vs. Gaming Realms plc | Beazer Homes vs. Cardinal Health | Beazer Homes vs. Optima Health plc | Beazer Homes vs. Scandinavian Tobacco Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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