Correlation Between Sekisui Chemical and Lennar
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical 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 Sekisui Chemical and Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sekisui Chemical Co and Lennar, you can compare the effects of market volatilities on Sekisui Chemical 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 Sekisui Chemical with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and Lennar.
Diversification Opportunities for Sekisui Chemical and Lennar
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sekisui and Lennar is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and Sekisui Chemical 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 Sekisui Chemical Co 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 Sekisui Chemical i.e., Sekisui Chemical and Lennar go up and down completely randomly.
Pair Corralation between Sekisui Chemical and Lennar
Assuming the 90 days horizon Sekisui Chemical is expected to generate 4.5 times less return on investment than Lennar. But when comparing it to its historical volatility, Sekisui Chemical Co is 1.1 times less risky than Lennar. It trades about 0.02 of its potential returns per unit of risk. Lennar is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,967 in Lennar on August 24, 2024 and sell it today you would earn a total of 8,029 from holding Lennar or generate 100.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sekisui Chemical Co vs. Lennar
Performance |
| Timeline |
| Sekisui Chemical |
| Lennar |
Sekisui Chemical and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and Lennar
The main advantage of trading using opposite Sekisui Chemical and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical 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.| Sekisui Chemical vs. Tencent Music Entertainment | Sekisui Chemical vs. RCS MediaGroup SpA | Sekisui Chemical vs. Elmos Semiconductor SE | Sekisui Chemical vs. Hollywood Bowl Group |
| Lennar vs. HOCHSCHILD MINING | Lennar vs. Wyndham Hotels Resorts | Lennar vs. Scientific Games | Lennar vs. PENN NATL GAMING |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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