Correlation Between Century Communities and Build A

Can any of the company-specific risk be diversified away by investing in both Century Communities and Build A 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 Century Communities and Build A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Century Communities and Build A Bear Workshop, you can compare the effects of market volatilities on Century Communities and Build A 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 Century Communities with a short position of Build A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Communities and Build A.

Diversification Opportunities for Century Communities and Build A

0.42

Correlation Coefficient

Century Communities  Build A

Very weak diversification

The 3 months correlation between Century and Build is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Century Communities and Build A Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build A Bear and Century Communities 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 Century Communities are associated (or correlated) with Build A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build A Bear has no effect on the direction of Century Communities i.e., Century Communities and Build A go up and down completely randomly.

Pair Corralation between Century Communities and Build A

Considering the 90-day investment horizon Century Communities is expected to generate 0.76 times more return on investment than Build A. However, Century Communities is 1.32 times less risky than Build A. It trades about -0.05 of its potential returns per unit of risk. Build A Bear Workshop is currently generating about -0.12 per unit of risk. If you would invest  7,260  in Century Communities on December 29, 2024 and sell it today you would lose (573.00) from holding Century Communities or give up 7.89% of portfolio value over 90 days.

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

Century Communities  vs.  Build A Bear Workshop

Century Communities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Communities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Build A Bear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Build A Bear Workshop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Century Communities and Build A

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

The idea behind Century Communities and Build A Bear Workshop 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.