Correlation Between Nationwide Building and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Nationwide Building 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 Nationwide Building and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Building Society and Beazer Homes USA, you can compare the effects of market volatilities on Nationwide Building 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 Nationwide Building with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and Beazer Homes.
Diversification Opportunities for Nationwide Building and Beazer Homes
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nationwide and Beazer is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society 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 Nationwide Building 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 Nationwide Building Society 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 Nationwide Building i.e., Nationwide Building and Beazer Homes go up and down completely randomly.
Pair Corralation between Nationwide Building and Beazer Homes
If you would invest 3,034 in Beazer Homes USA on August 26, 2024 and sell it today you would earn a total of 340.00 from holding Beazer Homes USA or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 59.09% |
| Values | Daily Returns |
Nationwide Building Society vs. Beazer Homes USA
Performance |
| Timeline |
| Nationwide Building |
| Beazer Homes USA |
Nationwide Building and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and Beazer Homes
The main advantage of trading using opposite Nationwide Building and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building 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.| Nationwide Building vs. Albion Technology General | Nationwide Building vs. Pfeiffer Vacuum Technology | Nationwide Building vs. DXC Technology Co | Nationwide Building vs. Gaztransport et Technigaz |
| Beazer Homes vs. Batm Advanced Communications | Beazer Homes vs. Edita Food Industries | Beazer Homes vs. Arrow Electronics | Beazer Homes vs. Electronic Arts |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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