Correlation Between Beazer Homes and Hovnanian Enterprises
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Hovnanian Enterprises 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 Hovnanian Enterprises 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 Hovnanian Enterprises, you can compare the effects of market volatilities on Beazer Homes and Hovnanian Enterprises 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 Hovnanian Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Hovnanian Enterprises.
Diversification Opportunities for Beazer Homes and Hovnanian Enterprises
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Beazer and Hovnanian is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Hovnanian Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hovnanian Enterprises 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 Hovnanian Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hovnanian Enterprises has no effect on the direction of Beazer Homes i.e., Beazer Homes and Hovnanian Enterprises go up and down completely randomly.
Pair Corralation between Beazer Homes and Hovnanian Enterprises
Considering the 90-day investment horizon Beazer Homes USA is expected to generate 0.73 times more return on investment than Hovnanian Enterprises. However, Beazer Homes USA is 1.38 times less risky than Hovnanian Enterprises. It trades about -0.06 of its potential returns per unit of risk. Hovnanian Enterprises is currently generating about -0.11 per unit of risk. If you would invest 3,077 in Beazer Homes USA on November 1, 2024 and sell it today you would lose (307.00) from holding Beazer Homes USA or give up 9.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beazer Homes USA vs. Hovnanian Enterprises
Performance |
| Timeline |
| Beazer Homes USA |
| Hovnanian Enterprises |
Beazer Homes and Hovnanian Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Hovnanian Enterprises
The main advantage of trading using opposite Beazer Homes and Hovnanian Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Hovnanian Enterprises 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 Hovnanian Enterprises will offset losses from the drop in Hovnanian Enterprises' long position.| Beazer Homes vs. KB Home | Beazer Homes vs. MI Homes | Beazer Homes vs. Taylor Morn Home | Beazer Homes vs. Lennar |
| Hovnanian Enterprises vs. Taylor Morn Home | Hovnanian Enterprises vs. KB Home | Hovnanian Enterprises vs. MI Homes | Hovnanian Enterprises vs. Century Communities |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |