Correlation Between View and Beacon Roofing

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

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

Diversification Opportunities for View and Beacon Roofing

0.0

Correlation Coefficient

View  Beacon Roofing

Pay attention - limited upside

The 3 months correlation between View and Beacon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding View Inc 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 View 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 View Inc 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 View i.e., View and Beacon Roofing go up and down completely randomly.

Pair Corralation between View and Beacon Roofing

If you would invest  10,032  in Beacon Roofing Supply on December 27, 2024 and sell it today you would earn a total of  2,352  from holding Beacon Roofing Supply or generate 23.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

View Inc  vs.  Beacon Roofing Supply

View Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days View Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, View is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Beacon Roofing Supply

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Roofing Supply are ranked lower than 16 (%) 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 View and Beacon Roofing

The main advantage of trading using opposite View and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if View 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 View Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.