Correlation Between European Metals and Lennar Corp
Can any of the company-specific risk be diversified away by investing in both European Metals and Lennar Corp 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 European Metals and Lennar Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Lennar Corp Cl, you can compare the effects of market volatilities on European Metals and Lennar Corp 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 European Metals with a short position of Lennar Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Lennar Corp.
Diversification Opportunities for European Metals and Lennar Corp
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between European and Lennar is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Lennar Corp Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar Corp Cl and European Metals 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 European Metals Holdings are associated (or correlated) with Lennar Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar Corp Cl has no effect on the direction of European Metals i.e., European Metals and Lennar Corp go up and down completely randomly.
Pair Corralation between European Metals and Lennar Corp
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Lennar Corp. In addition to that, European Metals is 1.84 times more volatile than Lennar Corp Cl. It trades about -0.11 of its total potential returns per unit of risk. Lennar Corp Cl is currently generating about -0.11 per unit of volatility. If you would invest 17,742 in Lennar Corp Cl on October 25, 2024 and sell it today you would lose (4,226) from holding Lennar Corp Cl or give up 23.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
European Metals Holdings vs. Lennar Corp Cl
Performance |
| Timeline |
| European Metals Holdings |
| Lennar Corp Cl |
European Metals and Lennar Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Lennar Corp
The main advantage of trading using opposite European Metals and Lennar Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Lennar Corp 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 Corp will offset losses from the drop in Lennar Corp's long position.| European Metals vs. Gamma Communications PLC | European Metals vs. InterContinental Hotels Group | European Metals vs. mobilezone holding AG | European Metals vs. Batm Advanced Communications |
| Lennar Corp vs. Erste Group Bank | Lennar Corp vs. Sydbank | Lennar Corp vs. Primary Health Properties | Lennar Corp vs. St Galler Kantonalbank |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |