Correlation Between Hays Plc and Beazer Homes

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

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

Diversification Opportunities for Hays Plc and Beazer Homes

-0.45

Correlation Coefficient

Hays Plc  Beazer Homes

Very good diversification

The 3 months correlation between Hays and Beazer is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hays plc 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 Hays Plc 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 Hays plc 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 Hays Plc i.e., Hays Plc and Beazer Homes go up and down completely randomly.

Pair Corralation between Hays Plc and Beazer Homes

Assuming the 90 days trading horizon Hays plc is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, Hays plc is 2.29 times less risky than Beazer Homes. The stock trades about -0.09 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,848  in Beazer Homes USA on September 15, 2024 and sell it today you would earn a total of  318.00  from holding Beazer Homes USA or generate 11.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	62.79%
Values	Daily Returns

Hays plc  vs.  Beazer Homes USA

Hays plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hays plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Beazer Homes USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hays Plc and Beazer Homes

The main advantage of trading using opposite Hays Plc and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hays Plc 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 Hays plc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.