Correlation Between Aedas Homes and Lennar
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Lennar 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 Aedas Homes and Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and Lennar, you can compare the effects of market volatilities on Aedas Homes and Lennar 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 Aedas Homes with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Lennar.
Diversification Opportunities for Aedas Homes and Lennar
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aedas and Lennar is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and Aedas Homes 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 Aedas Homes SA are associated (or correlated) with Lennar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar has no effect on the direction of Aedas Homes i.e., Aedas Homes and Lennar go up and down completely randomly.
Pair Corralation between Aedas Homes and Lennar
Assuming the 90 days horizon Aedas Homes SA is expected to under-perform the Lennar. In addition to that, Aedas Homes is 1.49 times more volatile than Lennar. It trades about -0.08 of its total potential returns per unit of risk. Lennar is currently generating about -0.01 per unit of volatility. If you would invest 16,054 in Lennar on August 25, 2024 and sell it today you would lose (58.00) from holding Lennar or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. Lennar
Performance |
| Timeline |
| Aedas Homes SA |
| Lennar |
Aedas Homes and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Lennar
The main advantage of trading using opposite Aedas Homes and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Lennar 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 Lennar will offset losses from the drop in Lennar's long position.| Aedas Homes vs. Lennar | Aedas Homes vs. NVR Inc | Aedas Homes vs. PulteGroup | Aedas Homes vs. Sekisui Chemical Co |
| Lennar vs. HOCHSCHILD MINING | Lennar vs. Wyndham Hotels Resorts | Lennar vs. Scientific Games | Lennar vs. PENN NATL GAMING |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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