Correlation Between DR Horton and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both DR Horton and LPKF Laser 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 DR Horton and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DR Horton and LPKF Laser Electronics, you can compare the effects of market volatilities on DR Horton and LPKF Laser 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 DR Horton with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of DR Horton and LPKF Laser.
Diversification Opportunities for DR Horton and LPKF Laser
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HO2 and LPKF is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding DR Horton and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and DR Horton 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 DR Horton are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of DR Horton i.e., DR Horton and LPKF Laser go up and down completely randomly.
Pair Corralation between DR Horton and LPKF Laser
Assuming the 90 days horizon DR Horton is expected to under-perform the LPKF Laser. In addition to that, DR Horton is 1.33 times more volatile than LPKF Laser Electronics. It trades about -0.02 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.05 per unit of volatility. If you would invest 822.00 in LPKF Laser Electronics on September 3, 2024 and sell it today you would earn a total of 40.00 from holding LPKF Laser Electronics or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DR Horton vs. LPKF Laser Electronics
Performance |
| Timeline |
| DR Horton |
| LPKF Laser Electronics |
DR Horton and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DR Horton and LPKF Laser
The main advantage of trading using opposite DR Horton and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DR Horton position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| DR Horton vs. LPKF Laser Electronics | DR Horton vs. GFL ENVIRONM | DR Horton vs. LG Electronics | DR Horton vs. ELECTRONIC ARTS |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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