Correlation Between GREENX METALS and Beazer Homes

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

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

Diversification Opportunities for GREENX METALS and Beazer Homes

-0.36

Correlation Coefficient

GREENX METALS  Beazer Homes

Very good diversification

The 3 months correlation between GREENX and Beazer is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GREENX METALS LTD 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 GREENX METALS 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 GREENX METALS LTD 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 GREENX METALS i.e., GREENX METALS and Beazer Homes go up and down completely randomly.

Pair Corralation between GREENX METALS and Beazer Homes

Assuming the 90 days trading horizon GREENX METALS LTD is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, GREENX METALS LTD is 1.03 times less risky than Beazer Homes. The stock trades about -0.06 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,080  in Beazer Homes USA on September 12, 2024 and sell it today you would lose (80.00) from holding Beazer Homes USA or give up 2.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GREENX METALS LTD  vs.  Beazer Homes USA

GREENX METALS LTD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GREENX METALS LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, GREENX METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Beazer Homes USA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beazer Homes USA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Beazer Homes may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GREENX METALS and Beazer Homes

The main advantage of trading using opposite GREENX METALS and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENX METALS 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.

The idea behind GREENX METALS LTD and Beazer Homes USA 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.

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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.