Correlation Between First Majestic and Beazer Homes

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

By analyzing existing cross correlation between First Majestic Silver and Beazer Homes USA, you can compare the effects of market volatilities on First Majestic and Beazer Homes 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 First Majestic with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Beazer Homes.

Diversification Opportunities for First Majestic and Beazer Homes

0.2

Correlation Coefficient

First Majestic  Beazer Homes

Modest diversification

The 3 months correlation between First and Beazer is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA and First Majestic 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 First Majestic Silver are associated (or correlated) with Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of First Majestic i.e., First Majestic and Beazer Homes go up and down completely randomly.

Pair Corralation between First Majestic and Beazer Homes

Assuming the 90 days trading horizon First Majestic is expected to generate 1.3 times less return on investment than Beazer Homes. In addition to that, First Majestic is 1.08 times more volatile than Beazer Homes USA. It trades about 0.13 of its total potential returns per unit of risk. Beazer Homes USA is currently generating about 0.19 per unit of volatility. If you would invest  1,887  in Beazer Homes USA on April 20, 2025 and sell it today you would earn a total of  435.00  from holding Beazer Homes USA or generate 23.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	58.06%
Values	Daily Returns

First Majestic Silver  vs.  Beazer Homes USA

First Majestic Silver

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, First Majestic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Beazer Homes USA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beazer Homes USA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Beazer Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Beazer Homes

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

The idea behind First Majestic Silver and Beazer Homes USA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.