Correlation Between Beacon Roofing and Masonite International
Can any of the company-specific risk be diversified away by investing in both Beacon Roofing and Masonite International 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 Beacon Roofing and Masonite International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beacon Roofing Supply and Masonite International Corp, you can compare the effects of market volatilities on Beacon Roofing and Masonite International 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 Beacon Roofing with a short position of Masonite International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beacon Roofing and Masonite International.
Diversification Opportunities for Beacon Roofing and Masonite International
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beacon and Masonite is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Beacon Roofing Supply and Masonite International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masonite International and Beacon Roofing 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 Beacon Roofing Supply are associated (or correlated) with Masonite International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masonite International has no effect on the direction of Beacon Roofing i.e., Beacon Roofing and Masonite International go up and down completely randomly.
Pair Corralation between Beacon Roofing and Masonite International
If you would invest 9,238 in Beacon Roofing Supply on August 24, 2024 and sell it today you would earn a total of 1,976 from holding Beacon Roofing Supply or generate 21.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Beacon Roofing Supply vs. Masonite International Corp
Performance |
| Timeline |
| Beacon Roofing Supply |
| Masonite International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Beacon Roofing and Masonite International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beacon Roofing and Masonite International
The main advantage of trading using opposite Beacon Roofing and Masonite International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beacon Roofing position performs unexpectedly, Masonite International 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 Masonite International will offset losses from the drop in Masonite International's long position.| Beacon Roofing vs. Quanex Building Products | Beacon Roofing vs. Gibraltar Industries | Beacon Roofing vs. Armstrong World Industries | Beacon Roofing vs. Janus International Group |
| Masonite International vs. Jeld Wen Holding | Masonite International vs. Installed Building Products | Masonite International vs. Armstrong World Industries | Masonite International vs. GMS Inc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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