Correlation Between Lennar Corp and Batm Advanced

Can any of the company-specific risk be diversified away by investing in both Lennar Corp and Batm Advanced 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 Corp and Batm Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lennar Corp Cl and Batm Advanced Communications, you can compare the effects of market volatilities on Lennar Corp and Batm Advanced 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 Corp with a short position of Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennar Corp and Batm Advanced.

Diversification Opportunities for Lennar Corp and Batm Advanced

0.28

Correlation Coefficient

Lennar Corp  Batm Advanced

Modest diversification

The 3 months correlation between Lennar and Batm is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lennar Corp Cl and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun and Lennar Corp 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 Corp Cl are associated (or correlated) with Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Lennar Corp i.e., Lennar Corp and Batm Advanced go up and down completely randomly.

Pair Corralation between Lennar Corp and Batm Advanced

Assuming the 90 days trading horizon Lennar Corp Cl is expected to under-perform the Batm Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Lennar Corp Cl is 1.43 times less risky than Batm Advanced. The stock trades about -0.67 of its potential returns per unit of risk. The Batm Advanced Communications is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,745  in Batm Advanced Communications on October 4, 2024 and sell it today you would earn a total of  90.00  from holding Batm Advanced Communications or generate 5.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lennar Corp Cl  vs.  Batm Advanced Communications

Lennar Corp Cl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lennar Corp Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Batm Advanced Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Batm Advanced is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lennar Corp and Batm Advanced

The main advantage of trading using opposite Lennar Corp and Batm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennar Corp position performs unexpectedly, Batm Advanced 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 Batm Advanced will offset losses from the drop in Batm Advanced's long position.

The idea behind Lennar Corp Cl and Batm Advanced Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.