Correlation Between Lennar and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Lennar and Automatic Data 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 Lennar and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennar and Automatic Data Processing, you can compare the effects of market volatilities on Lennar and Automatic Data 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 Lennar with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennar and Automatic Data.
Diversification Opportunities for Lennar and Automatic Data
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lennar and Automatic is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lennar and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and Lennar 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 Lennar are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Lennar i.e., Lennar and Automatic Data go up and down completely randomly.
Pair Corralation between Lennar and Automatic Data
Assuming the 90 days trading horizon Lennar is expected to under-perform the Automatic Data. In addition to that, Lennar is 1.71 times more volatile than Automatic Data Processing. It trades about -0.03 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.07 per unit of volatility. If you would invest 7,448 in Automatic Data Processing on September 12, 2024 and sell it today you would earn a total of 122.00 from holding Automatic Data Processing or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lennar vs. Automatic Data Processing
Performance |
| Timeline |
| Lennar |
| Automatic Data Processing |
Lennar and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennar and Automatic Data
The main advantage of trading using opposite Lennar and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennar position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Lennar vs. Capital One Financial | Lennar vs. American Airlines Group | Lennar vs. Credit Acceptance | Lennar vs. Tres Tentos Agroindustrial |
| Automatic Data vs. The Home Depot | Automatic Data vs. Costco Wholesale | Automatic Data vs. Telecomunicaes Brasileiras SA | Automatic Data vs. Unifique Telecomunicaes 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |