Correlation Between AMCON Distributing and Lennar
Can any of the company-specific risk be diversified away by investing in both AMCON Distributing 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 AMCON Distributing and Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMCON Distributing and Lennar, you can compare the effects of market volatilities on AMCON Distributing 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 AMCON Distributing with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Lennar.
Diversification Opportunities for AMCON Distributing and Lennar
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMCON and Lennar is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing i.e., AMCON Distributing and Lennar go up and down completely randomly.
Pair Corralation between AMCON Distributing and Lennar
Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the Lennar. In addition to that, AMCON Distributing is 3.05 times more volatile than Lennar. It trades about -0.04 of its total potential returns per unit of risk. Lennar is currently generating about -0.07 per unit of volatility. If you would invest 17,409 in Lennar on August 27, 2024 and sell it today you would lose (492.00) from holding Lennar or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMCON Distributing vs. Lennar
Performance |
| Timeline |
| AMCON Distributing |
| Lennar |
AMCON Distributing and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMCON Distributing and Lennar
The main advantage of trading using opposite AMCON Distributing and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing 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.| AMCON Distributing vs. Steven Madden | AMCON Distributing vs. Vera Bradley | AMCON Distributing vs. Caleres | AMCON Distributing vs. Rocky Brands |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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