Correlation Between BlueScope Steel and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel 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 BlueScope Steel and LANDSEA HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Limited and LANDSEA HOMES P, you can compare the effects of market volatilities on BlueScope Steel 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 BlueScope Steel with a short position of LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and LANDSEA HOMES.
Diversification Opportunities for BlueScope Steel and LANDSEA HOMES
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between BlueScope and LANDSEA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited 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 BlueScope Steel 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 BlueScope Steel Limited 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 BlueScope Steel i.e., BlueScope Steel and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between BlueScope Steel and LANDSEA HOMES
Assuming the 90 days horizon BlueScope Steel is expected to generate 2.49 times less return on investment than LANDSEA HOMES. But when comparing it to its historical volatility, BlueScope Steel Limited is 1.56 times less risky than LANDSEA HOMES. It trades about 0.02 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 910.00 in LANDSEA HOMES P on August 29, 2024 and sell it today you would earn a total of 160.00 from holding LANDSEA HOMES P or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueScope Steel Limited vs. LANDSEA HOMES P
Performance |
| Timeline |
| BlueScope Steel |
| LANDSEA HOMES P |
BlueScope Steel and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and LANDSEA HOMES
The main advantage of trading using opposite BlueScope Steel and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel 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.| BlueScope Steel vs. AM EAGLE OUTFITTERS | BlueScope Steel vs. International Game Technology | BlueScope Steel vs. Apollo Investment Corp | BlueScope Steel vs. Penn National Gaming |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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