Correlation Between Arhaus and PulteGroup

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

By analyzing existing cross correlation between Arhaus Inc and PulteGroup, you can compare the effects of market volatilities on Arhaus and PulteGroup 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 Arhaus with a short position of PulteGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and PulteGroup.

Diversification Opportunities for Arhaus and PulteGroup

0.54

Correlation Coefficient

Arhaus  PulteGroup

Very weak diversification

The 3 months correlation between Arhaus and PulteGroup is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and PulteGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PulteGroup and Arhaus 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 Arhaus Inc are associated (or correlated) with PulteGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PulteGroup has no effect on the direction of Arhaus i.e., Arhaus and PulteGroup go up and down completely randomly.

Pair Corralation between Arhaus and PulteGroup

Given the investment horizon of 90 days Arhaus Inc is expected to generate 2.23 times more return on investment than PulteGroup. However, Arhaus is 2.23 times more volatile than PulteGroup. It trades about -0.01 of its potential returns per unit of risk. PulteGroup is currently generating about -0.04 per unit of risk. If you would invest  928.00  in Arhaus Inc on December 29, 2024 and sell it today you would lose (71.00) from holding Arhaus Inc or give up 7.65% of portfolio value over 90 days.

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

Arhaus Inc  vs.  PulteGroup

Arhaus Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

PulteGroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days PulteGroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, PulteGroup is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arhaus and PulteGroup

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

The idea behind Arhaus Inc and PulteGroup 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.