Correlation Between Landsea Homes and EVgo Equity

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

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

Diversification Opportunities for Landsea Homes and EVgo Equity

0.51

Correlation Coefficient

Landsea Homes  EVgo Equity

Very weak diversification

The 3 months correlation between Landsea and EVgo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Landsea Homes and EVgo Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVgo Equity Warrants and Landsea 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 Landsea Homes are associated (or correlated) with EVgo Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVgo Equity Warrants has no effect on the direction of Landsea Homes i.e., Landsea Homes and EVgo Equity go up and down completely randomly.

Pair Corralation between Landsea Homes and EVgo Equity

Assuming the 90 days horizon Landsea Homes is expected to generate 1.65 times more return on investment than EVgo Equity. However, Landsea Homes is 1.65 times more volatile than EVgo Equity Warrants. It trades about 0.01 of its potential returns per unit of risk. EVgo Equity Warrants is currently generating about -0.12 per unit of risk. If you would invest  11.00  in Landsea Homes on December 29, 2024 and sell it today you would lose (3.88) from holding Landsea Homes or give up 35.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Landsea Homes  vs.  EVgo Equity Warrants

Landsea Homes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Landsea Homes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Landsea Homes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

EVgo Equity Warrants

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Landsea Homes and EVgo Equity

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

The idea behind Landsea Homes and EVgo Equity Warrants 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.