Correlation Between Beazer Homes and Krones AG

Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Krones AG 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 Krones AG 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 Krones AG ON, you can compare the effects of market volatilities on Beazer Homes and Krones AG 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 Krones AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Krones AG.

Diversification Opportunities for Beazer Homes and Krones AG

-0.47

Correlation Coefficient

Beazer Homes  Krones AG

Very good diversification

The 3 months correlation between Beazer and Krones is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Krones AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krones AG ON 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 Krones AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krones AG ON has no effect on the direction of Beazer Homes i.e., Beazer Homes and Krones AG go up and down completely randomly.

Pair Corralation between Beazer Homes and Krones AG

Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the Krones AG. In addition to that, Beazer Homes is 2.85 times more volatile than Krones AG ON. It trades about -0.04 of its total potential returns per unit of risk. Krones AG ON is currently generating about -0.02 per unit of volatility. If you would invest  12,344  in Krones AG ON on September 14, 2024 and sell it today you would lose (264.00) from holding Krones AG ON or give up 2.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.06%
Values	Daily Returns

Beazer Homes USA  vs.  Krones AG ON

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.

Krones AG ON

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Krones AG ON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Krones AG 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 Krones AG

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

The idea behind Beazer Homes USA and Krones AG ON 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .