Correlation Between Beazer Homes and Broadwind
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Broadwind 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 Broadwind 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 Broadwind, you can compare the effects of market volatilities on Beazer Homes and Broadwind 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 Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Broadwind.
Diversification Opportunities for Beazer Homes and Broadwind
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Beazer and Broadwind is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Beazer Homes i.e., Beazer Homes and Broadwind go up and down completely randomly.
Pair Corralation between Beazer Homes and Broadwind
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 0.42 times more return on investment than Broadwind. However, Beazer Homes USA is 2.36 times less risky than Broadwind. It trades about -0.02 of its potential returns per unit of risk. Broadwind is currently generating about -0.05 per unit of risk. If you would invest 2,660 in Beazer Homes USA on October 28, 2024 and sell it today you would lose (40.00) from holding Beazer Homes USA or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beazer Homes USA vs. Broadwind
Performance |
| Timeline |
| Beazer Homes USA |
| Broadwind |
Beazer Homes and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Broadwind
The main advantage of trading using opposite Beazer Homes and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| Beazer Homes vs. NVR Inc | Beazer Homes vs. Sekisui Chemical Co | Beazer Homes vs. Superior Plus Corp | Beazer Homes vs. Origin Agritech |
| Broadwind vs. Sanyo Chemical Industries | Broadwind vs. TYSON FOODS A | Broadwind vs. Shin Etsu Chemical Co | Broadwind vs. Sekisui Chemical Co |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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