Correlation Between KAUFMAN ET and LANDSEA GREEN

Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and LANDSEA GREEN 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 KAUFMAN ET and LANDSEA GREEN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KAUFMAN ET BROAD and LANDSEA GREEN MANAGEMENT, you can compare the effects of market volatilities on KAUFMAN ET and LANDSEA GREEN 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 KAUFMAN ET with a short position of LANDSEA GREEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and LANDSEA GREEN.

Diversification Opportunities for KAUFMAN ET and LANDSEA GREEN

0.0

Correlation Coefficient

KAUFMAN ET  LANDSEA GREEN

Pay attention - limited upside

The 3 months correlation between KAUFMAN and LANDSEA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and LANDSEA GREEN MANAGEMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA GREEN MANAGEMENT and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with LANDSEA GREEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA GREEN MANAGEMENT has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and LANDSEA GREEN go up and down completely randomly.

Pair Corralation between KAUFMAN ET and LANDSEA GREEN

Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 78.0 times less return on investment than LANDSEA GREEN. But when comparing it to its historical volatility, KAUFMAN ET BROAD is 38.25 times less risky than LANDSEA GREEN. It trades about 0.03 of its potential returns per unit of risk. LANDSEA GREEN MANAGEMENT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.35  in LANDSEA GREEN MANAGEMENT on October 4, 2024 and sell it today you would lose (1.25) from holding LANDSEA GREEN MANAGEMENT or give up 92.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KAUFMAN ET BROAD  vs.  LANDSEA GREEN MANAGEMENT

KAUFMAN ET BROAD

Risk-Adjusted Performance

0 of 100

Very Weak

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

LANDSEA GREEN MANAGEMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANDSEA GREEN MANAGEMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LANDSEA GREEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KAUFMAN ET and LANDSEA GREEN

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

The idea behind KAUFMAN ET BROAD and LANDSEA GREEN MANAGEMENT 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.