Correlation Between Beazer Homes and CARGOJET INC

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

Diversification Opportunities for Beazer Homes and CARGOJET INC

0.34

Correlation Coefficient

Beazer Homes  CARGOJET INC

Weak diversification

The 3 months correlation between Beazer and CARGOJET is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and CARGOJET INC VAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARGOJET INC VAR 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 CARGOJET INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARGOJET INC VAR has no effect on the direction of Beazer Homes i.e., Beazer Homes and CARGOJET INC go up and down completely randomly.

Pair Corralation between Beazer Homes and CARGOJET INC

Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the CARGOJET INC. In addition to that, Beazer Homes is 1.27 times more volatile than CARGOJET INC VAR. It trades about -0.14 of its total potential returns per unit of risk. CARGOJET INC VAR is currently generating about -0.13 per unit of volatility. If you would invest  6,922  in CARGOJET INC VAR on December 21, 2024 and sell it today you would lose (1,394) from holding CARGOJET INC VAR or give up 20.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Beazer Homes USA  vs.  CARGOJET INC VAR

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 fragile 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.

CARGOJET INC VAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARGOJET INC VAR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with Beazer Homes and CARGOJET INC

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

The idea behind Beazer Homes USA and CARGOJET INC VAR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.