Correlation Between Beazer Homes and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and MAGIC SOFTWARE 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 MAGIC SOFTWARE 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 MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Beazer Homes and MAGIC SOFTWARE 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 MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and MAGIC SOFTWARE.
Diversification Opportunities for Beazer Homes and MAGIC SOFTWARE
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beazer and MAGIC is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR 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 MAGIC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGIC SOFTWARE ENTR has no effect on the direction of Beazer Homes i.e., Beazer Homes and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Beazer Homes and MAGIC SOFTWARE
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 1.43 times more return on investment than MAGIC SOFTWARE. However, Beazer Homes is 1.43 times more volatile than MAGIC SOFTWARE ENTR. It trades about 0.09 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.11 per unit of risk. If you would invest 2,780 in Beazer Homes USA on August 31, 2024 and sell it today you would earn a total of 500.00 from holding Beazer Homes USA or generate 17.99% 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. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Beazer Homes USA |
| MAGIC SOFTWARE ENTR |
Beazer Homes and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and MAGIC SOFTWARE
The main advantage of trading using opposite Beazer Homes and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, MAGIC SOFTWARE 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 MAGIC SOFTWARE will offset losses from the drop in MAGIC SOFTWARE's long position.| Beazer Homes vs. Big 5 Sporting | Beazer Homes vs. SALESFORCE INC CDR | Beazer Homes vs. RETAIL FOOD GROUP | Beazer Homes vs. SCIENCE IN SPORT |
| MAGIC SOFTWARE vs. SIVERS SEMICONDUCTORS AB | MAGIC SOFTWARE vs. Darden Restaurants | MAGIC SOFTWARE vs. Reliance Steel Aluminum | MAGIC SOFTWARE vs. Q2M Managementberatung AG |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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