Correlation Between Beazer Homes and TBC Bank

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

Diversification Opportunities for Beazer Homes and TBC Bank

0.0

Correlation Coefficient

Beazer Homes  TBC Bank

Pay attention - limited upside

The 3 months correlation between Beazer and TBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and TBC Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBC Bank Group 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 TBC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBC Bank Group has no effect on the direction of Beazer Homes i.e., Beazer Homes and TBC Bank go up and down completely randomly.

Pair Corralation between Beazer Homes and TBC Bank

Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 1.92 times more return on investment than TBC Bank. However, Beazer Homes is 1.92 times more volatile than TBC Bank Group. It trades about 0.06 of its potential returns per unit of risk. TBC Bank Group is currently generating about 0.05 per unit of risk. If you would invest  1,677  in Beazer Homes USA on October 24, 2024 and sell it today you would earn a total of  1,180  from holding Beazer Homes USA or generate 70.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	59.24%
Values	Daily Returns

Beazer Homes USA  vs.  TBC Bank Group

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 unsteady 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.

TBC Bank Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TBC Bank Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TBC Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Beazer Homes and TBC Bank

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

The idea behind Beazer Homes USA and TBC Bank Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.