Correlation Between Beazer Homes and St Galler

Can any of the company-specific risk be diversified away by investing in both Beazer Homes and St Galler 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 Beazer Homes and St Galler into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beazer Homes USA and St Galler Kantonalbank, you can compare the effects of market volatilities on Beazer Homes and St Galler 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 Beazer Homes with a short position of St Galler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and St Galler.

Diversification Opportunities for Beazer Homes and St Galler

0.41

Correlation Coefficient

Beazer Homes  St Galler

Very weak diversification

The 3 months correlation between Beazer and 0QQZ is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler Kantonalbank and Beazer Homes 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 Beazer Homes USA are associated (or correlated) with St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of Beazer Homes i.e., Beazer Homes and St Galler go up and down completely randomly.

Pair Corralation between Beazer Homes and St Galler

Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 6.91 times more return on investment than St Galler. However, Beazer Homes is 6.91 times more volatile than St Galler Kantonalbank. It trades about 0.21 of its potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.11 per unit of risk. If you would invest  3,136  in Beazer Homes USA on September 1, 2024 and sell it today you would earn a total of  369.00  from holding Beazer Homes USA or generate 11.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	68.18%
Values	Daily Returns

Beazer Homes USA  vs.  St Galler Kantonalbank

Beazer Homes USA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beazer Homes USA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Beazer Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

St Galler Kantonalbank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, St Galler is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Beazer Homes and St Galler

The main advantage of trading using opposite Beazer Homes and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, St Galler 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 St Galler will offset losses from the drop in St Galler's long position.

The idea behind Beazer Homes USA and St Galler Kantonalbank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.