Correlation Between Beazer Homes and Brunswick
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Brunswick 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 Brunswick 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 Brunswick, you can compare the effects of market volatilities on Beazer Homes and Brunswick 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 Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Brunswick.
Diversification Opportunities for Beazer Homes and Brunswick
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beazer and Brunswick is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Beazer Homes i.e., Beazer Homes and Brunswick go up and down completely randomly.
Pair Corralation between Beazer Homes and Brunswick
Considering the 90-day investment horizon Beazer Homes USA is expected to generate 1.12 times more return on investment than Brunswick. However, Beazer Homes is 1.12 times more volatile than Brunswick. It trades about 0.19 of its potential returns per unit of risk. Brunswick is currently generating about -0.03 per unit of risk. If you would invest 3,119 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 374.00 from holding Beazer Homes USA or generate 11.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beazer Homes USA vs. Brunswick
Performance |
| Timeline |
| Beazer Homes USA |
| Brunswick |
Beazer Homes and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Brunswick
The main advantage of trading using opposite Beazer Homes and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.| Beazer Homes vs. MI Homes | Beazer Homes vs. Meritage | Beazer Homes vs. Taylor Morn Home | Beazer Homes vs. LGI Homes |
| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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