Correlation Between Escalade Incorporated and Lennar
Can any of the company-specific risk be diversified away by investing in both Escalade Incorporated 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 Escalade Incorporated and Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Escalade Incorporated and Lennar, you can compare the effects of market volatilities on Escalade Incorporated 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 Escalade Incorporated with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escalade Incorporated and Lennar.
Diversification Opportunities for Escalade Incorporated and Lennar
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Escalade and Lennar is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and Escalade Incorporated 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 Escalade Incorporated 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 Escalade Incorporated i.e., Escalade Incorporated and Lennar go up and down completely randomly.
Pair Corralation between Escalade Incorporated and Lennar
Given the investment horizon of 90 days Escalade Incorporated is expected to generate 1.5 times more return on investment than Lennar. However, Escalade Incorporated is 1.5 times more volatile than Lennar. It trades about 0.12 of its potential returns per unit of risk. Lennar is currently generating about 0.04 per unit of risk. If you would invest 1,395 in Escalade Incorporated on August 31, 2024 and sell it today you would earn a total of 104.00 from holding Escalade Incorporated or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Escalade Incorporated vs. Lennar
Performance |
| Timeline |
| Escalade Incorporated |
| Lennar |
Escalade Incorporated and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Escalade Incorporated and Lennar
The main advantage of trading using opposite Escalade Incorporated and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escalade Incorporated 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.| Escalade Incorporated vs. Johnson Outdoors | Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Superior Uniform Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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