Correlation Between Gamma Communications and Lennar Corp
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and Lennar Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications PLC and Lennar Corp Cl, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of Lennar Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Lennar Corp.
Diversification Opportunities for Gamma Communications and Lennar Corp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gamma and Lennar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC 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 Gamma Communications 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 Gamma Communications PLC 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 Gamma Communications i.e., Gamma Communications and Lennar Corp go up and down completely randomly.
Pair Corralation between Gamma Communications and Lennar Corp
Assuming the 90 days trading horizon Gamma Communications is expected to generate 1.48 times less return on investment than Lennar Corp. But when comparing it to its historical volatility, Gamma Communications PLC is 1.32 times less risky than Lennar Corp. It trades about 0.04 of its potential returns per unit of risk. Lennar Corp Cl is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,203 in Lennar Corp Cl on October 11, 2024 and sell it today you would earn a total of 4,137 from holding Lennar Corp Cl or generate 44.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.59% |
| Values | Daily Returns |
Gamma Communications PLC vs. Lennar Corp Cl
Performance |
| Timeline |
| Gamma Communications PLC |
| Lennar Corp Cl |
Gamma Communications and Lennar Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Lennar Corp
The main advantage of trading using opposite Gamma Communications and Lennar Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. LPKF Laser Electronics | Gamma Communications vs. Heavitree Brewery | Gamma Communications vs. PureTech Health plc | Gamma Communications vs. Monster Beverage Corp |
| Lennar Corp vs. Gamma Communications PLC | Lennar Corp vs. Liberty Media Corp | Lennar Corp vs. Verizon Communications | Lennar Corp vs. Batm Advanced Communications |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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