Correlation Between Performance Food and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Beazer Homes USA, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Beazer Homes.
Diversification Opportunities for Performance Food and Beazer Homes
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Performance and Beazer is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group 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 Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and Beazer Homes go up and down completely randomly.
Pair Corralation between Performance Food and Beazer Homes
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.36 times more return on investment than Beazer Homes. However, Performance Food Group is 2.76 times less risky than Beazer Homes. It trades about 0.16 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.01 per unit of risk. If you would invest 7,550 in Performance Food Group on October 24, 2024 and sell it today you would earn a total of 900.00 from holding Performance Food Group or generate 11.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Beazer Homes USA
Performance |
| Timeline |
| Performance Food |
| Beazer Homes USA |
Performance Food and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Beazer Homes
The main advantage of trading using opposite Performance Food and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. Playa Hotels Resorts | Performance Food vs. CanSino Biologics | Performance Food vs. PLAYTECH | Performance Food vs. INTERSHOP Communications Aktiengesellschaft |
| Beazer Homes vs. TreeHouse Foods | Beazer Homes vs. Performance Food Group | Beazer Homes vs. GWILLI FOOD | Beazer Homes vs. PLANT VEDA FOODS |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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