Correlation Between Lennar and Illumina
Can any of the company-specific risk be diversified away by investing in both Lennar and Illumina 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 Illumina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennar and Illumina, you can compare the effects of market volatilities on Lennar and Illumina 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 Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennar and Illumina.
Diversification Opportunities for Lennar and Illumina
Very good diversification
The 3 months correlation between Lennar and Illumina is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lennar and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Lennar i.e., Lennar and Illumina go up and down completely randomly.
Pair Corralation between Lennar and Illumina
Assuming the 90 days trading horizon Lennar is expected to generate 1.66 times more return on investment than Illumina. However, Lennar is 1.66 times more volatile than Illumina. It trades about 0.13 of its potential returns per unit of risk. Illumina is currently generating about -0.05 per unit of risk. If you would invest 98,109 in Lennar on September 2, 2024 and sell it today you would earn a total of 6,233 from holding Lennar or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lennar vs. Illumina
Performance |
| Timeline |
| Lennar |
| Illumina |
Lennar and Illumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennar and Illumina
The main advantage of trading using opposite Lennar and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennar position performs unexpectedly, Illumina 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 Illumina will offset losses from the drop in Illumina's long position.| Lennar vs. Paycom Software | Lennar vs. Micron Technology | Lennar vs. Bio Techne | Lennar vs. Agilent Technologies |
| Illumina vs. Verizon Communications | Illumina vs. T Mobile | Illumina vs. Deutsche Bank Aktiengesellschaft | Illumina vs. Zoom Video 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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