Correlation Between MDC Holdings and Lennar
Can any of the company-specific risk be diversified away by investing in both MDC Holdings and Lennar 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 MDC Holdings and Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MDC Holdings and Lennar, you can compare the effects of market volatilities on MDC Holdings and Lennar 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 MDC Holdings with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of MDC Holdings and Lennar.
Diversification Opportunities for MDC Holdings and Lennar
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MDC and Lennar is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding MDC Holdings and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and MDC Holdings 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 MDC Holdings are associated (or correlated) with Lennar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar has no effect on the direction of MDC Holdings i.e., MDC Holdings and Lennar go up and down completely randomly.
Pair Corralation between MDC Holdings and Lennar
If you would invest 4,705 in MDC Holdings on August 28, 2024 and sell it today you would earn a total of 0.00 from holding MDC Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 1.59% |
| Values | Daily Returns |
MDC Holdings vs. Lennar
Performance |
| Timeline |
| MDC Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lennar |
MDC Holdings and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MDC Holdings and Lennar
The main advantage of trading using opposite MDC Holdings and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDC Holdings position performs unexpectedly, Lennar 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 Lennar will offset losses from the drop in Lennar's long position.| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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