Correlation Between GFL ENVIRONM and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and LANDSEA 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 GFL ENVIRONM and LANDSEA HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and LANDSEA HOMES P, you can compare the effects of market volatilities on GFL ENVIRONM and LANDSEA 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 GFL ENVIRONM with a short position of LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and LANDSEA HOMES.
Diversification Opportunities for GFL ENVIRONM and LANDSEA HOMES
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GFL and LANDSEA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P and GFL ENVIRONM 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 GFL ENVIRONM are associated (or correlated) with LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and LANDSEA HOMES
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 0.67 times more return on investment than LANDSEA HOMES. However, GFL ENVIRONM is 1.5 times less risky than LANDSEA HOMES. It trades about 0.07 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about 0.03 per unit of risk. If you would invest 2,994 in GFL ENVIRONM on August 29, 2024 and sell it today you would earn a total of 1,426 from holding GFL ENVIRONM or generate 47.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. LANDSEA HOMES P
Performance |
| Timeline |
| GFL ENVIRONM |
| LANDSEA HOMES P |
GFL ENVIRONM and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and LANDSEA HOMES
The main advantage of trading using opposite GFL ENVIRONM and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, LANDSEA 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 LANDSEA HOMES will offset losses from the drop in LANDSEA HOMES's long position.| GFL ENVIRONM vs. Waste Management | GFL ENVIRONM vs. Waste Connections | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. SIVERS SEMICONDUCTORS AB |
| LANDSEA HOMES vs. Superior Plus Corp | LANDSEA HOMES vs. NMI Holdings | LANDSEA HOMES vs. SIVERS SEMICONDUCTORS AB | LANDSEA HOMES vs. Talanx AG |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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