Correlation Between Land Homes and Coles

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

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

Diversification Opportunities for Land Homes and Coles

0.0

Correlation Coefficient

Land Homes  Coles

Pay attention - limited upside

The 3 months correlation between Land and Coles is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Land Homes Group and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and Land Homes 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 Land Homes Group are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of Land Homes i.e., Land Homes and Coles go up and down completely randomly.

Pair Corralation between Land Homes and Coles

If you would invest  1,751  in Coles Group on October 6, 2024 and sell it today you would earn a total of  145.00  from holding Coles Group or generate 8.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Land Homes Group  vs.  Coles Group

Land Homes Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Coles Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coles Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Coles may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Land Homes and Coles

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

The idea behind Land Homes Group and Coles Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.