Correlation Between Intelligent Living and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both Intelligent Living and Beacon Roofing 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 Intelligent Living and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intelligent Living Application and Beacon Roofing Supply, you can compare the effects of market volatilities on Intelligent Living and Beacon Roofing 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 Intelligent Living with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intelligent Living and Beacon Roofing.
Diversification Opportunities for Intelligent Living and Beacon Roofing
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Intelligent and Beacon is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Intelligent Living Application and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and Intelligent Living 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 Intelligent Living Application are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Intelligent Living i.e., Intelligent Living and Beacon Roofing go up and down completely randomly.
Pair Corralation between Intelligent Living and Beacon Roofing
Given the investment horizon of 90 days Intelligent Living Application is expected to under-perform the Beacon Roofing. But the stock apears to be less risky and, when comparing its historical volatility, Intelligent Living Application is 1.0 times less risky than Beacon Roofing. The stock trades about -0.03 of its potential returns per unit of risk. The Beacon Roofing Supply is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,485 in Beacon Roofing Supply on August 28, 2024 and sell it today you would earn a total of 1,767 from holding Beacon Roofing Supply or generate 18.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intelligent Living Application vs. Beacon Roofing Supply
Performance |
| Timeline |
| Intelligent Living |
| Beacon Roofing Supply |
Intelligent Living and Beacon Roofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intelligent Living and Beacon Roofing
The main advantage of trading using opposite Intelligent Living and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intelligent Living position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.| Intelligent Living vs. Azek Company | Intelligent Living vs. Atlas Engineered Products | Intelligent Living vs. Antelope Enterprise Holdings | Intelligent Living vs. Latham Group |
| Beacon Roofing vs. Global Industrial Co | Beacon Roofing vs. WESCO International | Beacon Roofing vs. MSC Industrial Direct |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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