Stop-loss on the minds of BECN investors as it performed worse than the broader market
13 Dec, 201813 min read
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BEACON ROOFING SUPPLY INC delivered massive losses on Thursday. It delivered -0.72% to close at 31.82. On a day when the overall market breadth was 35%, it closed higher than 73% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.
BECN is currently in a bullish trend. The previous long signal in BECN has not been profitable for investors in general. If you are invested in BECN at current levels please make sure that your allocation is limited and that your portfolio is well diversified.
BECN has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 3 Jan, 2018 to 9 Nov, 2018. Over the last 2 years 11 months and 9 days, BECN underperformed the SP500 index on 51% days.
During the last three months BECN was mostly loss making and delivered on average -0.26% per day. It's best return during this period (of +17.0%) was on Wednesday, 21 Nov, 2018. While it's worst loss in the same period (of -6.31%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 12 losing days, which started on 9 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -21.04% of investor capital.
The last 12 months saw BECN's investors making profits in 3 months and incurring losses in 9 months. BECN was less consistent in delivering monthly returs than SP500 index. BECN significantly outperformed SP500 index in Nov 2018, when it returned +24.9% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. BECN had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jul 2018 to Oct 2018) during which period it delivered -35.53%.
An investment in knowledge pays the best interest.
-- Benjamin Franklin
BECN is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in BECN's volatility from 28 Sep, 2018 to 20 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that BECN has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
SP500 index has more chance of extreme outcomes than BECN. Therefore, SP500 must receive a lower allocation than BECN in your portfolio. SP500 index usually has shorter drawdown period than BECN.
On a general note (since you are interested in BECN), two instruments that have delivered similar performance as BECN are EVA and RRR. They are suitable as good alternative investment candidates that can diversify your portfolio.
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