Correlation Between FORWARD AIR and Beazer Homes

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

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

Diversification Opportunities for FORWARD AIR and Beazer Homes

0.76

Correlation Coefficient

FORWARD AIR  Beazer Homes

Poor diversification

The 3 months correlation between FORWARD and Beazer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P 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 FORWARD AIR 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 FORWARD AIR P 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 FORWARD AIR i.e., FORWARD AIR and Beazer Homes go up and down completely randomly.

Pair Corralation between FORWARD AIR and Beazer Homes

Assuming the 90 days horizon FORWARD AIR P is expected to generate 1.64 times more return on investment than Beazer Homes. However, FORWARD AIR is 1.64 times more volatile than Beazer Homes USA. It trades about 0.23 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.15 per unit of risk. If you would invest  1,250  in FORWARD AIR P on April 21, 2025 and sell it today you would earn a total of  1,065  from holding FORWARD AIR P or generate 85.2% return on investment over 90 days.

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

FORWARD AIR P  vs.  Beazer Homes USA

FORWARD AIR P

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FORWARD AIR P are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORWARD AIR reported 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 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Beazer Homes reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORWARD AIR and Beazer Homes

The main advantage of trading using opposite FORWARD AIR and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR 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 FORWARD AIR P 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.