Correlation Between PulteGroup and Lennar
Can any of the company-specific risk be diversified away by investing in both PulteGroup 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 PulteGroup and Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PulteGroup and Lennar, you can compare the effects of market volatilities on PulteGroup 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 PulteGroup with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PulteGroup and Lennar.
Diversification Opportunities for PulteGroup and Lennar
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PulteGroup and Lennar is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PulteGroup and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and PulteGroup 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 PulteGroup 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 PulteGroup i.e., PulteGroup and Lennar go up and down completely randomly.
Pair Corralation between PulteGroup and Lennar
Assuming the 90 days horizon PulteGroup is expected to generate 1.16 times more return on investment than Lennar. However, PulteGroup is 1.16 times more volatile than Lennar. It trades about 0.07 of its potential returns per unit of risk. Lennar is currently generating about 0.06 per unit of risk. If you would invest 9,779 in PulteGroup on August 28, 2024 and sell it today you would earn a total of 3,223 from holding PulteGroup or generate 32.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PulteGroup vs. Lennar
Performance |
| Timeline |
| PulteGroup |
| Lennar |
PulteGroup and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PulteGroup and Lennar
The main advantage of trading using opposite PulteGroup and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PulteGroup 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.| PulteGroup vs. Tsingtao Brewery | PulteGroup vs. EIDESVIK OFFSHORE NK | PulteGroup vs. BW OFFSHORE LTD | PulteGroup vs. SHELF DRILLING LTD |
| Lennar vs. Chuangs China Investments | Lennar vs. WisdomTree Investments | Lennar vs. REINET INVESTMENTS SCA | Lennar vs. Insurance Australia Group |
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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