Correlation Between DAX Index and Beazer Homes
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By analyzing existing cross correlation between DAX Index and Beazer Homes USA, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Beazer Homes.
Diversification Opportunities for DAX Index and Beazer Homes
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DAX and Beazer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and Beazer Homes go up and down completely randomly.
Pair Corralation between DAX Index and Beazer Homes
Assuming the 90 days trading horizon DAX Index is expected to generate 2.05 times less return on investment than Beazer Homes. But when comparing it to its historical volatility, DAX Index is 3.96 times less risky than Beazer Homes. It trades about 0.2 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,720 in Beazer Homes USA on September 6, 2024 and sell it today you would earn a total of 560.00 from holding Beazer Homes USA or generate 20.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
DAX Index vs. Beazer Homes USA
Performance |
Timeline |
DAX Index and Beazer Homes Volatility Contrast
Predicted Return Density |
Returns |
DAX Index
Pair trading matchups for DAX Index
Beazer Homes USA
Pair trading matchups for Beazer Homes
Pair Trading with DAX Index and Beazer Homes
The main advantage of trading using opposite DAX Index and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.DAX Index vs. Direct Line Insurance | DAX Index vs. Tencent Music Entertainment | DAX Index vs. INSURANCE AUST GRP | DAX Index vs. TOWNSQUARE MEDIA INC |
Beazer Homes vs. Live Nation Entertainment | Beazer Homes vs. CARSALESCOM | Beazer Homes vs. Hollywood Bowl Group | Beazer Homes vs. Dave Busters Entertainment |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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