Correlation Between Beacon Roofing and Webuild SpA
Can any of the company-specific risk be diversified away by investing in both Beacon Roofing and Webuild SpA 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 Webuild SpA 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 Webuild SpA ADR, you can compare the effects of market volatilities on Beacon Roofing and Webuild SpA 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 Webuild SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beacon Roofing and Webuild SpA.
Diversification Opportunities for Beacon Roofing and Webuild SpA
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Beacon and Webuild is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Beacon Roofing Supply and Webuild SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webuild SpA ADR 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 Webuild SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webuild SpA ADR has no effect on the direction of Beacon Roofing i.e., Beacon Roofing and Webuild SpA go up and down completely randomly.
Pair Corralation between Beacon Roofing and Webuild SpA
Given the investment horizon of 90 days Beacon Roofing Supply is expected to generate 0.49 times more return on investment than Webuild SpA. However, Beacon Roofing Supply is 2.02 times less risky than Webuild SpA. It trades about 0.07 of its potential returns per unit of risk. Webuild SpA ADR is currently generating about 0.02 per unit of risk. If you would invest 5,799 in Beacon Roofing Supply on September 4, 2024 and sell it today you would earn a total of 5,430 from holding Beacon Roofing Supply or generate 93.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 65.25% |
| Values | Daily Returns |
Beacon Roofing Supply vs. Webuild SpA ADR
Performance |
| Timeline |
| Beacon Roofing Supply |
| Webuild SpA ADR |
Beacon Roofing and Webuild SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beacon Roofing and Webuild SpA
The main advantage of trading using opposite Beacon Roofing and Webuild SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beacon Roofing position performs unexpectedly, Webuild SpA 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 Webuild SpA will offset losses from the drop in Webuild SpA's long position.| Beacon Roofing vs. Global Industrial Co | Beacon Roofing vs. Ferguson Plc | Beacon Roofing vs. MSC Industrial Direct |
| Webuild SpA vs. Kajima Corp ADR | Webuild SpA vs. IES Holdings | Webuild SpA vs. Bouygues SA | Webuild SpA vs. Concrete Pumping 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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