Correlation Between Gamma Communications and Lennar Corp

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

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

Diversification Opportunities for Gamma Communications and Lennar Corp

0.14

Correlation Coefficient

Gamma Communications  Lennar Corp

Average diversification

The 3 months correlation between Gamma and Lennar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Lennar Corp Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar Corp Cl and Gamma Communications 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 Gamma Communications PLC are associated (or correlated) with Lennar Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar Corp Cl has no effect on the direction of Gamma Communications i.e., Gamma Communications and Lennar Corp go up and down completely randomly.

Pair Corralation between Gamma Communications and Lennar Corp

Assuming the 90 days trading horizon Gamma Communications PLC is expected to under-perform the Lennar Corp. But the stock apears to be less risky and, when comparing its historical volatility, Gamma Communications PLC is 1.38 times less risky than Lennar Corp. The stock trades about -0.24 of its potential returns per unit of risk. The Lennar Corp Cl is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  13,804  in Lennar Corp Cl on December 22, 2024 and sell it today you would lose (2,223) from holding Lennar Corp Cl or give up 16.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Gamma Communications PLC  vs.  Lennar Corp Cl

Gamma Communications PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamma Communications PLC 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lennar Corp Cl

Risk-Adjusted Performance

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gamma Communications and Lennar Corp

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

The idea behind Gamma Communications PLC and Lennar Corp Cl 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.