Correlation Between EJF Investments and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both EJF Investments 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 EJF Investments and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EJF Investments and Beazer Homes USA, you can compare the effects of market volatilities on EJF Investments 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 EJF Investments with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of EJF Investments and Beazer Homes.
Diversification Opportunities for EJF Investments and Beazer Homes
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between EJF and Beazer is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments 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 EJF Investments 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 EJF Investments 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 EJF Investments i.e., EJF Investments and Beazer Homes go up and down completely randomly.
Pair Corralation between EJF Investments and Beazer Homes
Assuming the 90 days trading horizon EJF Investments is expected to generate 0.32 times more return on investment than Beazer Homes. However, EJF Investments is 3.14 times less risky than Beazer Homes. It trades about 0.19 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.49 per unit of risk. If you would invest 11,750 in EJF Investments on October 11, 2024 and sell it today you would earn a total of 550.00 from holding EJF Investments or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.0% |
| Values | Daily Returns |
EJF Investments vs. Beazer Homes USA
Performance |
| Timeline |
| EJF Investments |
| Beazer Homes USA |
EJF Investments and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EJF Investments and Beazer Homes
The main advantage of trading using opposite EJF Investments and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments 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.| EJF Investments vs. Fevertree Drinks Plc | EJF Investments vs. Ecclesiastical Insurance Office | EJF Investments vs. GreenX Metals | EJF Investments vs. Associated British Foods |
| Beazer Homes vs. AcadeMedia AB | Beazer Homes vs. MediaZest plc | Beazer Homes vs. Liberty Media Corp | Beazer Homes vs. UNIQA Insurance Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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