Correlation Between Lennar and FibraHotel
Can any of the company-specific risk be diversified away by investing in both Lennar and FibraHotel 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 FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennar and FibraHotel, you can compare the effects of market volatilities on Lennar and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennar and FibraHotel.
Diversification Opportunities for Lennar and FibraHotel
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lennar and FibraHotel is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lennar and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Lennar i.e., Lennar and FibraHotel go up and down completely randomly.
Pair Corralation between Lennar and FibraHotel
Assuming the 90 days trading horizon Lennar is expected to generate 0.77 times more return on investment than FibraHotel. However, Lennar is 1.29 times less risky than FibraHotel. It trades about 0.09 of its potential returns per unit of risk. FibraHotel is currently generating about 0.03 per unit of risk. If you would invest 176,919 in Lennar on September 2, 2024 and sell it today you would earn a total of 183,341 from holding Lennar or generate 103.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lennar vs. FibraHotel
Performance |
| Timeline |
| Lennar |
| FibraHotel |
Lennar and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennar and FibraHotel
The main advantage of trading using opposite Lennar and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennar position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| Lennar vs. FIBRA Storage | Lennar vs. KB Home | Lennar vs. Samsung Electronics Co | Lennar vs. Southwest Airlines |
| FibraHotel vs. Lloyds Banking Group | FibraHotel vs. United States Steel | FibraHotel vs. Capital One Financial | FibraHotel vs. Micron Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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