Correlation Between Gafisa SA and Lennar
Can any of the company-specific risk be diversified away by investing in both Gafisa SA 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 Gafisa SA and Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gafisa SA and Lennar, you can compare the effects of market volatilities on Gafisa SA 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 Gafisa SA with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gafisa SA and Lennar.
Diversification Opportunities for Gafisa SA and Lennar
Significant diversification
The 3 months correlation between Gafisa and Lennar is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and Gafisa SA 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 Gafisa SA 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 Gafisa SA i.e., Gafisa SA and Lennar go up and down completely randomly.
Pair Corralation between Gafisa SA and Lennar
Assuming the 90 days trading horizon Gafisa SA is expected to under-perform the Lennar. In addition to that, Gafisa SA is 3.87 times more volatile than Lennar. It trades about 0.0 of its total potential returns per unit of risk. Lennar is currently generating about 0.11 per unit of volatility. If you would invest 45,191 in Lennar on August 26, 2024 and sell it today you would earn a total of 53,120 from holding Lennar or generate 117.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.63% |
| Values | Daily Returns |
Gafisa SA vs. Lennar
Performance |
| Timeline |
| Gafisa SA |
| Lennar |
Gafisa SA and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gafisa SA and Lennar
The main advantage of trading using opposite Gafisa SA and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gafisa SA 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.| Gafisa SA vs. Cyrela Brazil Realty | Gafisa SA vs. Rossi Residencial SA | Gafisa SA vs. MRV Engenharia e | Gafisa SA vs. PDG Realty SA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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