Correlation Between Floor Decor and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Floor Decor 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 Floor Decor and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floor Decor Holdings and Beazer Homes USA, you can compare the effects of market volatilities on Floor Decor 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 Floor Decor with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and Beazer Homes.
Diversification Opportunities for Floor Decor and Beazer Homes
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Floor and Beazer is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings 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 Floor Decor 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 Floor Decor Holdings 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 Floor Decor i.e., Floor Decor and Beazer Homes go up and down completely randomly.
Pair Corralation between Floor Decor and Beazer Homes
Considering the 90-day investment horizon Floor Decor is expected to generate 1.41 times less return on investment than Beazer Homes. In addition to that, Floor Decor is 1.17 times more volatile than Beazer Homes USA. It trades about 0.14 of its total potential returns per unit of risk. Beazer Homes USA is currently generating about 0.23 per unit of volatility. If you would invest 3,076 in Beazer Homes USA on September 1, 2024 and sell it today you would earn a total of 419.00 from holding Beazer Homes USA or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floor Decor Holdings vs. Beazer Homes USA
Performance |
| Timeline |
| Floor Decor Holdings |
| Beazer Homes USA |
Floor Decor and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floor Decor and Beazer Homes
The main advantage of trading using opposite Floor Decor and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor 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.| Floor Decor vs. Arhaus Inc | Floor Decor vs. Live Ventures | Floor Decor vs. Haverty Furniture Companies | Floor Decor vs. Haverty Furniture Companies |
| Beazer Homes vs. KB Home | Beazer Homes vs. MI Homes | Beazer Homes vs. Taylor Morn Home | Beazer Homes vs. Lennar |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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