Correlation Between Lennar Corp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lennar Corp and Dow Jones 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 Lennar Corp and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennar Corp Cl and Dow Jones Industrial, you can compare the effects of market volatilities on Lennar Corp and Dow Jones 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 Lennar Corp with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennar Corp and Dow Jones.
Diversification Opportunities for Lennar Corp and Dow Jones
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lennar and Dow is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lennar Corp Cl and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Lennar Corp 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 Lennar Corp Cl are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lennar Corp i.e., Lennar Corp and Dow Jones go up and down completely randomly.
Pair Corralation between Lennar Corp and Dow Jones
Assuming the 90 days trading horizon Lennar Corp Cl is expected to under-perform the Dow Jones. In addition to that, Lennar Corp is 2.19 times more volatile than Dow Jones Industrial. It trades about -0.5 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.21 per unit of volatility. If you would invest 4,414,856 in Dow Jones Industrial on October 12, 2024 and sell it today you would lose (151,336) from holding Dow Jones Industrial or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lennar Corp Cl vs. Dow Jones Industrial
Performance |
| Timeline |
Lennar Corp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lennar Corp Cl
Pair trading matchups for Lennar Corp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lennar Corp and Dow Jones
The main advantage of trading using opposite Lennar Corp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennar Corp position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lennar Corp vs. Aptitude Software Group | Lennar Corp vs. SBM Offshore NV | Lennar Corp vs. EVS Broadcast Equipment | Lennar Corp vs. Universal Display Corp |
| Dow Jones vs. Toro | Dow Jones vs. Foot Locker | Dow Jones vs. Abercrombie Fitch | Dow Jones vs. 51Talk Online Education |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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