Correlation Between Beacon Roofing and Interface
Can any of the company-specific risk be diversified away by investing in both Beacon Roofing and Interface 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 Beacon Roofing and Interface into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beacon Roofing Supply and Interface, you can compare the effects of market volatilities on Beacon Roofing and Interface 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 Beacon Roofing with a short position of Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beacon Roofing and Interface.
Diversification Opportunities for Beacon Roofing and Interface
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Beacon and Interface is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Beacon Roofing Supply and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface and Beacon Roofing 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 Beacon Roofing Supply are associated (or correlated) with Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interface has no effect on the direction of Beacon Roofing i.e., Beacon Roofing and Interface go up and down completely randomly.
Pair Corralation between Beacon Roofing and Interface
Given the investment horizon of 90 days Beacon Roofing is expected to generate 3.33 times less return on investment than Interface. In addition to that, Beacon Roofing is 1.32 times more volatile than Interface. It trades about 0.04 of its total potential returns per unit of risk. Interface is currently generating about 0.18 per unit of volatility. If you would invest 1,444 in Interface on July 10, 2024 and sell it today you would earn a total of 377.00 from holding Interface or generate 26.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Beacon Roofing Supply vs. Interface
Performance |
Timeline |
Beacon Roofing Supply |
Interface |
Beacon Roofing and Interface Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Beacon Roofing and Interface
The main advantage of trading using opposite Beacon Roofing and Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beacon Roofing position performs unexpectedly, Interface 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 Interface will offset losses from the drop in Interface's long position.Beacon Roofing vs. Quanex Building Products | Beacon Roofing vs. Gibraltar Industries | Beacon Roofing vs. Armstrong World Industries | Beacon Roofing vs. Janus International Group |
Interface vs. Quanex Building Products | Interface vs. Janus International Group | Interface vs. Apogee Enterprises | Interface vs. Gibraltar Industries |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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