Correlation Between Growth Fund and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Beazer Homes USA, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Beazer Homes.
Diversification Opportunities for Growth Fund and Beazer Homes
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growth and Beazer is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of 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 Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Beazer Homes go up and down completely randomly.
Pair Corralation between Growth Fund and Beazer Homes
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.26 times more return on investment than Beazer Homes. However, Growth Fund Of is 3.78 times less risky than Beazer Homes. It trades about 0.24 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.02 per unit of risk. If you would invest 7,457 in Growth Fund Of on November 3, 2024 and sell it today you would earn a total of 374.00 from holding Growth Fund Of or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Growth Fund Of vs. Beazer Homes USA
Performance |
| Timeline |
| Growth Fund |
| Beazer Homes USA |
Growth Fund and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Beazer Homes
The main advantage of trading using opposite Growth Fund and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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