Correlation Between Beazer Homes and HAVERTY FURNITURE

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

Diversification Opportunities for Beazer Homes and HAVERTY FURNITURE

0.36

Correlation Coefficient

Beazer Homes  HAVERTY FURNITURE

Weak diversification

The 3 months correlation between Beazer and HAVERTY is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and HAVERTY FURNITURE A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVERTY FURNITURE 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 HAVERTY FURNITURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVERTY FURNITURE has no effect on the direction of Beazer Homes i.e., Beazer Homes and HAVERTY FURNITURE go up and down completely randomly.

Pair Corralation between Beazer Homes and HAVERTY FURNITURE

Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the HAVERTY FURNITURE. In addition to that, Beazer Homes is 1.4 times more volatile than HAVERTY FURNITURE A. It trades about -0.12 of its total potential returns per unit of risk. HAVERTY FURNITURE A is currently generating about -0.02 per unit of volatility. If you would invest  1,933  in HAVERTY FURNITURE A on December 23, 2024 and sell it today you would lose (73.00) from holding HAVERTY FURNITURE A or give up 3.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Beazer Homes USA  vs.  HAVERTY FURNITURE A

Beazer Homes USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

HAVERTY FURNITURE

Risk-Adjusted Performance

Very Weak

Over the last 90 days HAVERTY FURNITURE A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, HAVERTY FURNITURE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Beazer Homes and HAVERTY FURNITURE

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

The idea behind Beazer Homes USA and HAVERTY FURNITURE A 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.