Correlation Between Beazer Homes and Cass Information
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Cass Information 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 Cass Information 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 Cass Information Systems, you can compare the effects of market volatilities on Beazer Homes and Cass Information 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 Cass Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Cass Information.
Diversification Opportunities for Beazer Homes and Cass Information
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beazer and Cass is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Cass Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Information Systems 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 Cass Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Information Systems has no effect on the direction of Beazer Homes i.e., Beazer Homes and Cass Information go up and down completely randomly.
Pair Corralation between Beazer Homes and Cass Information
Assuming the 90 days trading horizon Beazer Homes is expected to generate 1.08 times less return on investment than Cass Information. In addition to that, Beazer Homes is 1.76 times more volatile than Cass Information Systems. It trades about 0.04 of its total potential returns per unit of risk. Cass Information Systems is currently generating about 0.08 per unit of volatility. If you would invest 3,830 in Cass Information Systems on August 25, 2024 and sell it today you would earn a total of 330.00 from holding Cass Information Systems or generate 8.62% 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. Cass Information Systems
Performance |
| Timeline |
| Beazer Homes USA |
| Cass Information Systems |
Beazer Homes and Cass Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Cass Information
The main advantage of trading using opposite Beazer Homes and Cass Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Cass Information 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 Cass Information will offset losses from the drop in Cass Information's long position.| Beazer Homes vs. Safety Insurance Group | Beazer Homes vs. ECHO INVESTMENT ZY | Beazer Homes vs. HANOVER INSURANCE | Beazer Homes vs. MSAD INSURANCE |
| Cass Information vs. Austevoll Seafood ASA | Cass Information vs. Beazer Homes USA | Cass Information vs. CENTURIA OFFICE REIT | Cass Information vs. United Natural Foods |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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