Correlation Between Beazer Homes and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Burlington Stores 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 Burlington Stores 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 Burlington Stores, you can compare the effects of market volatilities on Beazer Homes and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Burlington Stores.
Diversification Opportunities for Beazer Homes and Burlington Stores
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beazer and Burlington is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Beazer Homes i.e., Beazer Homes and Burlington Stores go up and down completely randomly.
Pair Corralation between Beazer Homes and Burlington Stores
Assuming the 90 days trading horizon Beazer Homes is expected to generate 1.4 times less return on investment than Burlington Stores. In addition to that, Beazer Homes is 2.05 times more volatile than Burlington Stores. It trades about 0.1 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.29 per unit of volatility. If you would invest 23,400 in Burlington Stores on August 28, 2024 and sell it today you would earn a total of 3,800 from holding Burlington Stores or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beazer Homes USA vs. Burlington Stores
Performance |
| Timeline |
| Beazer Homes USA |
| Burlington Stores |
Beazer Homes and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Burlington Stores
The main advantage of trading using opposite Beazer Homes and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| Beazer Homes vs. GALENA MINING LTD | Beazer Homes vs. Nippon Steel | Beazer Homes vs. Perseus Mining Limited | Beazer Homes vs. PRECISION DRILLING P |
| Burlington Stores vs. Laureate Education | Burlington Stores vs. Postal Savings Bank | Burlington Stores vs. DeVry Education Group | Burlington Stores vs. IDP EDUCATION LTD |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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