Correlation Between Vastned Retail and Beazer Homes

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

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

Diversification Opportunities for Vastned Retail and Beazer Homes

0.73

Correlation Coefficient

Vastned Retail  Beazer Homes

Poor diversification

The 3 months correlation between Vastned and Beazer is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV 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 Vastned Retail 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 Vastned Retail NV 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 Vastned Retail i.e., Vastned Retail and Beazer Homes go up and down completely randomly.

Pair Corralation between Vastned Retail and Beazer Homes

Assuming the 90 days trading horizon Vastned Retail is expected to generate 84.94 times less return on investment than Beazer Homes. But when comparing it to its historical volatility, Vastned Retail NV is 3.29 times less risky than Beazer Homes. It trades about 0.0 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,724  in Beazer Homes USA on October 25, 2024 and sell it today you would earn a total of  44.00  from holding Beazer Homes USA or generate 1.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	38.46%
Values	Daily Returns

Vastned Retail NV  vs.  Beazer Homes USA

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV 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.

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.

Pair Trading with Vastned Retail and Beazer Homes

The main advantage of trading using opposite Vastned Retail and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vastned Retail 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 Vastned Retail NV 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.