Correlation Between GlaxoSmithKline PLC and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC 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 GlaxoSmithKline PLC and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline PLC ADR and Beazer Homes USA, you can compare the effects of market volatilities on GlaxoSmithKline PLC 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 GlaxoSmithKline PLC with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Beazer Homes.
Diversification Opportunities for GlaxoSmithKline PLC and Beazer Homes
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Beazer is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC 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 GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Beazer Homes go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Beazer Homes
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.8 times less risky than Beazer Homes. The stock trades about -0.3 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,034 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 482.00 from holding Beazer Homes USA or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Beazer Homes USA
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Beazer Homes USA |
GlaxoSmithKline PLC and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Beazer Homes
The main advantage of trading using opposite GlaxoSmithKline PLC and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC 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.| GlaxoSmithKline PLC vs. Novartis AG ADR | GlaxoSmithKline PLC vs. AstraZeneca PLC ADR | GlaxoSmithKline PLC vs. Roche Holding Ltd | GlaxoSmithKline PLC vs. Bristol Myers Squibb |
| Beazer Homes vs. GreenX Metals | Beazer Homes vs. Jacquet Metal Service | Beazer Homes vs. Futura Medical | Beazer Homes vs. Kaufman Et Broad |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |