Correlation Between A2Z Smart and Beacon Roofing

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Can any of the company-specific risk be diversified away by investing in both A2Z Smart 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 A2Z Smart and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A2Z Smart Technologies and Beacon Roofing Supply, you can compare the effects of market volatilities on A2Z Smart 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 A2Z Smart with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2Z Smart and Beacon Roofing.

Diversification Opportunities for A2Z Smart and Beacon Roofing

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between A2Z and Beacon is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding A2Z Smart Technologies 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 A2Z Smart 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 A2Z Smart Technologies 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 A2Z Smart i.e., A2Z Smart and Beacon Roofing go up and down completely randomly.

Pair Corralation between A2Z Smart and Beacon Roofing

Allowing for the 90-day total investment horizon A2Z Smart Technologies is expected to generate 3.81 times more return on investment than Beacon Roofing. However, A2Z Smart is 3.81 times more volatile than Beacon Roofing Supply. It trades about 0.25 of its potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.09 per unit of risk. If you would invest  188.00  in A2Z Smart Technologies on August 2, 2024 and sell it today you would earn a total of  357.00  from holding A2Z Smart Technologies or generate 189.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

A2Z Smart Technologies  vs.  Beacon Roofing Supply

 Performance 
       Timeline  
A2Z Smart Technologies 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, A2Z Smart showed solid returns over the last few months and may actually be approaching a breakup point.
Beacon Roofing Supply 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Roofing Supply are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Beacon Roofing may actually be approaching a critical reversion point that can send shares even higher in December 2024.

A2Z Smart and Beacon Roofing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with A2Z Smart and Beacon Roofing

The main advantage of trading using opposite A2Z Smart and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2Z Smart 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 A2Z Smart Technologies 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 Stocks Directory module to find actively traded stocks across global markets.

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