Correlation Between Edita Food and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Edita Food and Beazer Homes 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 Edita Food and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Beazer Homes USA, you can compare the effects of market volatilities on Edita Food and Beazer Homes 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 Edita Food with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Beazer Homes.
Diversification Opportunities for Edita Food and Beazer Homes
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Edita and Beazer is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA and Edita Food 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 Edita Food Industries are associated (or correlated) with Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of Edita Food i.e., Edita Food and Beazer Homes go up and down completely randomly.
Pair Corralation between Edita Food and Beazer Homes
Assuming the 90 days trading horizon Edita Food is expected to generate 12.67 times less return on investment than Beazer Homes. But when comparing it to its historical volatility, Edita Food Industries is 1.44 times less risky than Beazer Homes. It trades about 0.01 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,364 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 2,152 from holding Beazer Homes USA or generate 157.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.14% |
| Values | Daily Returns |
Edita Food Industries vs. Beazer Homes USA
Performance |
| Timeline |
| Edita Food Industries |
| Beazer Homes USA |
Edita Food and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Beazer Homes
The main advantage of trading using opposite Edita Food and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food position performs unexpectedly, Beazer Homes 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.| Edita Food vs. Samsung Electronics Co | Edita Food vs. Samsung Electronics Co | Edita Food vs. Toyota Motor Corp | Edita Food vs. Reliance Industries Ltd |
| Beazer Homes vs. Lendinvest PLC | Beazer Homes vs. Neometals | Beazer Homes vs. Albion Technology General | Beazer Homes vs. Jupiter Fund Management |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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