Correlation Between Legacy Housing and MDC Holdings
Can any of the company-specific risk be diversified away by investing in both Legacy Housing and MDC Holdings 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 Legacy Housing and MDC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legacy Housing Corp and MDC Holdings, you can compare the effects of market volatilities on Legacy Housing and MDC Holdings 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 Legacy Housing with a short position of MDC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Housing and MDC Holdings.
Diversification Opportunities for Legacy Housing and MDC Holdings
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legacy and MDC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Housing Corp and MDC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDC Holdings and Legacy Housing 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 Legacy Housing Corp are associated (or correlated) with MDC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDC Holdings has no effect on the direction of Legacy Housing i.e., Legacy Housing and MDC Holdings go up and down completely randomly.
Pair Corralation between Legacy Housing and MDC Holdings
If you would invest 2,480 in Legacy Housing Corp on September 1, 2024 and sell it today you would earn a total of 137.00 from holding Legacy Housing Corp or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Legacy Housing Corp vs. MDC Holdings
Performance |
| Timeline |
| Legacy Housing Corp |
| MDC Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Legacy Housing and MDC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Housing and MDC Holdings
The main advantage of trading using opposite Legacy Housing and MDC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Housing position performs unexpectedly, MDC Holdings 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 MDC Holdings will offset losses from the drop in MDC Holdings' long position.| Legacy Housing vs. MI Homes | Legacy Housing vs. Taylor Morn Home | Legacy Housing vs. TRI Pointe Homes | Legacy Housing vs. Beazer Homes USA |
| MDC Holdings vs. Taylor Morn Home | MDC Holdings vs. Century Communities | MDC Holdings vs. Beazer Homes USA | MDC Holdings vs. Meritage |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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