Correlation Between Arhaus and Landsea Homes
Can any of the company-specific risk be diversified away by investing in both Arhaus 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 Arhaus and Landsea Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arhaus Inc and Landsea Homes, you can compare the effects of market volatilities on Arhaus 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 Arhaus with a short position of Landsea Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and Landsea Homes.
Diversification Opportunities for Arhaus and Landsea Homes
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arhaus and Landsea is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Landsea Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes and Arhaus 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 Arhaus Inc 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 has no effect on the direction of Arhaus i.e., Arhaus and Landsea Homes go up and down completely randomly.
Pair Corralation between Arhaus and Landsea Homes
Given the investment horizon of 90 days Arhaus Inc is expected to under-perform the Landsea Homes. But the stock apears to be less risky and, when comparing its historical volatility, Arhaus Inc is 2.61 times less risky than Landsea Homes. The stock trades about -0.12 of its potential returns per unit of risk. The Landsea Homes is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Landsea Homes on August 30, 2024 and sell it today you would lose (7.00) from holding Landsea Homes or give up 24.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Arhaus Inc vs. Landsea Homes
Performance |
| Timeline |
| Arhaus Inc |
| Landsea Homes |
Arhaus and Landsea Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arhaus and Landsea Homes
The main advantage of trading using opposite Arhaus and Landsea Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus 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' long position.| Arhaus vs. Purple Innovation | Arhaus vs. Mohawk Industries | Arhaus vs. La Z Boy Incorporated | Arhaus vs. Leggett Platt Incorporated |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |