Correlation Between Beazer Homes and GreenSky

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

Diversification Opportunities for Beazer Homes and GreenSky

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Beazer and GreenSky is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and GreenSky Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenSky 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 GreenSky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenSky has no effect on the direction of Beazer Homes i.e., Beazer Homes and GreenSky go up and down completely randomly.

Pair Corralation between Beazer Homes and GreenSky

If you would invest  1,545  in Beazer Homes USA on February 20, 2022 and sell it today you would lose (23.00)  from holding Beazer Homes USA or give up 1.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy4.55%
ValuesDaily Returns

Beazer Homes USA  vs.  GreenSky Inc

 Performance (%) 
      Timeline 
Beazer Homes USA 
Beazer Performance
0 of 100
Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Beazer Homes is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Beazer Price Channel

GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, GreenSky is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Beazer Homes and GreenSky Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Beazer Homes and GreenSky

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

Beazer Homes USA

Pair trading matchups for Beazer Homes

The idea behind Beazer Homes USA and GreenSky 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.

GreenSky

Pair trading matchups for GreenSky

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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