Correlation Between Burgerfi International and Landsea Homes

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

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

Diversification Opportunities for Burgerfi International and Landsea Homes

0.25

Correlation Coefficient

Burgerfi International  Landsea Homes

Modest diversification

The 3 months correlation between Burgerfi and Landsea is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Burgerfi International and Landsea Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes and Burgerfi International 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 Burgerfi International are associated (or correlated) with Landsea Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landsea Homes has no effect on the direction of Burgerfi International i.e., Burgerfi International and Landsea Homes go up and down completely randomly.

Pair Corralation between Burgerfi International and Landsea Homes

If you would invest  8.30  in Burgerfi International on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Burgerfi International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Burgerfi International  vs.  Landsea Homes

Burgerfi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burgerfi International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Burgerfi International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Landsea Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landsea Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Burgerfi International and Landsea Homes

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

The idea behind Burgerfi International and Landsea Homes 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.