Correlation Between Hovnanian Enterprises and Live Ventures

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

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

Diversification Opportunities for Hovnanian Enterprises and Live Ventures

0.55

Correlation Coefficient

Hovnanian Enterprises  Live Ventures

Very weak diversification

The 3 months correlation between Hovnanian and Live is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hovnanian Enterprises and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures and Hovnanian Enterprises 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 Hovnanian Enterprises are associated (or correlated) with Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of Hovnanian Enterprises i.e., Hovnanian Enterprises and Live Ventures go up and down completely randomly.

Pair Corralation between Hovnanian Enterprises and Live Ventures

Considering the 90-day investment horizon Hovnanian Enterprises is expected to under-perform the Live Ventures. But the stock apears to be less risky and, when comparing its historical volatility, Hovnanian Enterprises is 1.07 times less risky than Live Ventures. The stock trades about -0.66 of its potential returns per unit of risk. The Live Ventures is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  983.00  in Live Ventures on October 13, 2024 and sell it today you would lose (28.00) from holding Live Ventures or give up 2.85% of portfolio value over 90 days.

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

Hovnanian Enterprises  vs.  Live Ventures

Hovnanian Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

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

Live Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Ventures 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 rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hovnanian Enterprises and Live Ventures

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

The idea behind Hovnanian Enterprises and Live Ventures 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.