Correlation Between 26442EAF7 and Beacon Roofing

Can any of the company-specific risk be diversified away by investing in both 26442EAF7 and Beacon Roofing 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 26442EAF7 and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE ENERGY OHIO and Beacon Roofing Supply, you can compare the effects of market volatilities on 26442EAF7 and Beacon Roofing 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 26442EAF7 with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26442EAF7 and Beacon Roofing.

Diversification Opportunities for 26442EAF7 and Beacon Roofing

-0.1

Correlation Coefficient

26442EAF7  Beacon Roofing

Good diversification

The 3 months correlation between 26442EAF7 and Beacon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding DUKE ENERGY OHIO and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and 26442EAF7 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 DUKE ENERGY OHIO are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of 26442EAF7 i.e., 26442EAF7 and Beacon Roofing go up and down completely randomly.

Pair Corralation between 26442EAF7 and Beacon Roofing

Assuming the 90 days trading horizon DUKE ENERGY OHIO is expected to generate 0.21 times more return on investment than Beacon Roofing. However, DUKE ENERGY OHIO is 4.79 times less risky than Beacon Roofing. It trades about -0.23 of its potential returns per unit of risk. Beacon Roofing Supply is currently generating about -0.21 per unit of risk. If you would invest  9,669  in DUKE ENERGY OHIO on October 10, 2024 and sell it today you would lose (123.00) from holding DUKE ENERGY OHIO or give up 1.27% of portfolio value over 90 days.

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

DUKE ENERGY OHIO  vs.  Beacon Roofing Supply

DUKE ENERGY OHIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY OHIO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442EAF7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Beacon Roofing Supply

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Roofing Supply are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Beacon Roofing displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 26442EAF7 and Beacon Roofing

The main advantage of trading using opposite 26442EAF7 and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26442EAF7 position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.

The idea behind DUKE ENERGY OHIO and Beacon Roofing Supply 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.