Correlation Between Beacon Roofing and VINCI SA
Can any of the company-specific risk be diversified away by investing in both Beacon Roofing and VINCI SA 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 VINCI SA 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 VINCI SA, you can compare the effects of market volatilities on Beacon Roofing and VINCI SA 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 VINCI SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beacon Roofing and VINCI SA.
Diversification Opportunities for Beacon Roofing and VINCI SA
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beacon and VINCI is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Beacon Roofing Supply and VINCI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VINCI SA 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 VINCI SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VINCI SA has no effect on the direction of Beacon Roofing i.e., Beacon Roofing and VINCI SA go up and down completely randomly.
Pair Corralation between Beacon Roofing and VINCI SA
Given the investment horizon of 90 days Beacon Roofing Supply is expected to generate 0.76 times more return on investment than VINCI SA. However, Beacon Roofing Supply is 1.32 times less risky than VINCI SA. It trades about 0.08 of its potential returns per unit of risk. VINCI SA is currently generating about 0.01 per unit of risk. If you would invest 5,419 in Beacon Roofing Supply on September 8, 2024 and sell it today you would earn a total of 5,738 from holding Beacon Roofing Supply or generate 105.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
Beacon Roofing Supply vs. VINCI SA
Performance |
| Timeline |
| Beacon Roofing Supply |
| VINCI SA |
Beacon Roofing and VINCI SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beacon Roofing and VINCI SA
The main advantage of trading using opposite Beacon Roofing and VINCI SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beacon Roofing position performs unexpectedly, VINCI SA 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 VINCI SA will offset losses from the drop in VINCI SA'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 |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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