Correlation Between Beazer Homes and Airbus SE
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Airbus SE 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 Airbus SE 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 Airbus SE, you can compare the effects of market volatilities on Beazer Homes and Airbus SE 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 Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Airbus SE.
Diversification Opportunities for Beazer Homes and Airbus SE
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beazer and Airbus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Beazer Homes i.e., Beazer Homes and Airbus SE go up and down completely randomly.
Pair Corralation between Beazer Homes and Airbus SE
Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the Airbus SE. In addition to that, Beazer Homes is 1.38 times more volatile than Airbus SE. It trades about -0.52 of its total potential returns per unit of risk. Airbus SE is currently generating about 0.08 per unit of volatility. If you would invest 15,624 in Airbus SE on October 9, 2024 and sell it today you would earn a total of 242.00 from holding Airbus SE or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beazer Homes USA vs. Airbus SE
Performance |
| Timeline |
| Beazer Homes USA |
| Airbus SE |
Beazer Homes and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Airbus SE
The main advantage of trading using opposite Beazer Homes and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Airbus SE 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 Airbus SE will offset losses from the drop in Airbus SE's long position.| Beazer Homes vs. Ross Stores | Beazer Homes vs. CARSALESCOM | Beazer Homes vs. QURATE RETAIL INC | Beazer Homes vs. FAST RETAIL ADR |
| Airbus SE vs. Harmony Gold Mining | Airbus SE vs. Forsys Metals Corp | Airbus SE vs. ANGLO ASIAN MINING | Airbus SE vs. Zijin Mining 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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