Correlation Between LION ONE and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and Beazer Homes USA, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Beazer Homes.
Diversification Opportunities for LION ONE and Beazer Homes
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LION and Beazer is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS 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 LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and Beazer Homes go up and down completely randomly.
Pair Corralation between LION ONE and Beazer Homes
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 1.34 times less risky than Beazer Homes. The stock trades about -0.15 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Beazer Homes USA on August 30, 2024 and sell it today you would earn a total of 380.00 from holding Beazer Homes USA or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LION ONE METALS vs. Beazer Homes USA
Performance |
| Timeline |
| LION ONE METALS |
| Beazer Homes USA |
LION ONE and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Beazer Homes
The main advantage of trading using opposite LION ONE and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.| LION ONE vs. ARISTOCRAT LEISURE | LION ONE vs. Solstad Offshore ASA | LION ONE vs. VIAPLAY GROUP AB | LION ONE vs. PLAYTIKA HOLDING DL 01 |
| Beazer Homes vs. Sekisui Chemical Co | Beazer Homes vs. Superior Plus Corp | Beazer Homes vs. NMI Holdings | Beazer Homes vs. SIVERS SEMICONDUCTORS AB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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