Correlation Between Lennar and Guidewire Software,

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

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

Diversification Opportunities for Lennar and Guidewire Software,

-0.52

Correlation Coefficient

Lennar  Guidewire Software,

Excellent diversification

The 3 months correlation between Lennar and Guidewire is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lennar and Guidewire Software, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software, and Lennar 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 Lennar are associated (or correlated) with Guidewire Software,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software, has no effect on the direction of Lennar i.e., Lennar and Guidewire Software, go up and down completely randomly.

Pair Corralation between Lennar and Guidewire Software,

Assuming the 90 days trading horizon Lennar is expected to under-perform the Guidewire Software,. In addition to that, Lennar is 2.54 times more volatile than Guidewire Software,. It trades about -0.1 of its total potential returns per unit of risk. Guidewire Software, is currently generating about 0.11 per unit of volatility. If you would invest  9,005  in Guidewire Software, on December 25, 2024 and sell it today you would earn a total of  736.00  from holding Guidewire Software, or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.34%
Values	Daily Returns

Lennar  vs.  Guidewire Software,

Lennar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lennar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guidewire Software,

Risk-Adjusted Performance

OK

Over the last 90 days Guidewire Software, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Guidewire Software, may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lennar and Guidewire Software,

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

The idea behind Lennar and Guidewire Software, 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.