Correlation Between NVR and Beazley PLC

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

By analyzing existing cross correlation between NVR Inc and Beazley PLC, you can compare the effects of market volatilities on NVR and Beazley PLC 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 NVR with a short position of Beazley PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVR and Beazley PLC.

Diversification Opportunities for NVR and Beazley PLC

-0.64

Correlation Coefficient

NVR  Beazley PLC

Excellent diversification

The 3 months correlation between NVR and Beazley is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NVR Inc and Beazley PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazley PLC and NVR 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 NVR Inc are associated (or correlated) with Beazley PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazley PLC has no effect on the direction of NVR i.e., NVR and Beazley PLC go up and down completely randomly.

Pair Corralation between NVR and Beazley PLC

Assuming the 90 days horizon NVR Inc is expected to under-perform the Beazley PLC. But the stock apears to be less risky and, when comparing its historical volatility, NVR Inc is 1.39 times less risky than Beazley PLC. The stock trades about -0.18 of its potential returns per unit of risk. The Beazley PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Beazley PLC on December 20, 2024 and sell it today you would earn a total of  50.00  from holding Beazley PLC or generate 5.0% return on investment over 90 days.

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

NVR Inc  vs.  Beazley PLC

NVR Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVR Inc 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.

Beazley PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beazley PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Beazley PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NVR and Beazley PLC

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

The idea behind NVR Inc and Beazley PLC 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.