Correlation Between Beacon Roofing and Global Industrial
Can any of the company-specific risk be diversified away by investing in both Beacon Roofing and Global Industrial 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 Global Industrial 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 Global Industrial Co, you can compare the effects of market volatilities on Beacon Roofing and Global Industrial 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 Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beacon Roofing and Global Industrial.
Diversification Opportunities for Beacon Roofing and Global Industrial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beacon and Global is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Beacon Roofing Supply and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial 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 Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of Beacon Roofing i.e., Beacon Roofing and Global Industrial go up and down completely randomly.
Pair Corralation between Beacon Roofing and Global Industrial
Given the investment horizon of 90 days Beacon Roofing Supply is expected to generate 0.55 times more return on investment than Global Industrial. However, Beacon Roofing Supply is 1.81 times less risky than Global Industrial. It trades about 0.31 of its potential returns per unit of risk. Global Industrial Co is currently generating about -0.09 per unit of risk. If you would invest 9,313 in Beacon Roofing Supply on August 30, 2024 and sell it today you would earn a total of 1,966 from holding Beacon Roofing Supply or generate 21.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beacon Roofing Supply vs. Global Industrial Co
Performance |
| Timeline |
| Beacon Roofing Supply |
| Global Industrial |
Beacon Roofing and Global Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beacon Roofing and Global Industrial
The main advantage of trading using opposite Beacon Roofing and Global Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beacon Roofing position performs unexpectedly, Global Industrial 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 Global Industrial will offset losses from the drop in Global Industrial'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 |
| Global Industrial vs. Distribution Solutions Group | Global Industrial vs. Core Main | Global Industrial vs. Applied Industrial Technologies | Global Industrial vs. BlueLinx Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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