Correlation Between SENECA FOODS and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS 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 SENECA FOODS and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and Beazer Homes USA, you can compare the effects of market volatilities on SENECA FOODS 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 SENECA FOODS with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and Beazer Homes.
Diversification Opportunities for SENECA FOODS and Beazer Homes
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SENECA and Beazer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A 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 SENECA FOODS 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 SENECA FOODS A 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 SENECA FOODS i.e., SENECA FOODS and Beazer Homes go up and down completely randomly.
Pair Corralation between SENECA FOODS and Beazer Homes
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.33 times more return on investment than Beazer Homes. However, SENECA FOODS A is 3.04 times less risky than Beazer Homes. It trades about 0.34 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.02 per unit of risk. If you would invest 6,000 in SENECA FOODS A on September 13, 2024 and sell it today you would earn a total of 750.00 from holding SENECA FOODS A or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Beazer Homes USA
Performance |
| Timeline |
| SENECA FOODS A |
| Beazer Homes USA |
SENECA FOODS and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS and Beazer Homes
The main advantage of trading using opposite SENECA FOODS and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS 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.| SENECA FOODS vs. Check Point Software | SENECA FOODS vs. Consolidated Communications Holdings | SENECA FOODS vs. MAROC TELECOM | SENECA FOODS vs. Vishay Intertechnology |
| Beazer Homes vs. Gaztransport Technigaz SA | Beazer Homes vs. Texas Roadhouse | Beazer Homes vs. Tyson Foods | Beazer Homes vs. VARIOUS EATERIES LS |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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