Correlation Between Beazer Homes and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Aedas 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 Beazer Homes and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beazer Homes USA and Aedas Homes SA, you can compare the effects of market volatilities on Beazer Homes and Aedas 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 Beazer Homes with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Aedas Homes.
Diversification Opportunities for Beazer Homes and Aedas Homes
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beazer and Aedas is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and Beazer Homes 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 Beazer Homes USA are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Beazer Homes i.e., Beazer Homes and Aedas Homes go up and down completely randomly.
Pair Corralation between Beazer Homes and Aedas Homes
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 2.64 times more return on investment than Aedas Homes. However, Beazer Homes is 2.64 times more volatile than Aedas Homes SA. It trades about 0.13 of its potential returns per unit of risk. Aedas Homes SA is currently generating about -0.16 per unit of risk. If you would invest 2,900 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 380.00 from holding Beazer Homes USA or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Beazer Homes USA vs. Aedas Homes SA
Performance |
| Timeline |
| Beazer Homes USA |
| Aedas Homes SA |
Beazer Homes and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Aedas Homes
The main advantage of trading using opposite Beazer Homes and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Aedas 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Beazer Homes vs. Superior Plus Corp | Beazer Homes vs. NMI Holdings | Beazer Homes vs. SIVERS SEMICONDUCTORS AB | Beazer Homes vs. Talanx AG |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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