Correlation Between NTG Nordic and Lennar

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

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

Diversification Opportunities for NTG Nordic and Lennar

-0.4

Correlation Coefficient

NTG Nordic  Lennar

Very good diversification

The 3 months correlation between NTG and Lennar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with Lennar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar has no effect on the direction of NTG Nordic i.e., NTG Nordic and Lennar go up and down completely randomly.

Pair Corralation between NTG Nordic and Lennar

Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 0.88 times more return on investment than Lennar. However, NTG Nordic Transport is 1.14 times less risky than Lennar. It trades about 0.07 of its potential returns per unit of risk. Lennar is currently generating about -0.12 per unit of risk. If you would invest  3,440  in NTG Nordic Transport on December 20, 2024 and sell it today you would earn a total of  230.00  from holding NTG Nordic Transport or generate 6.69% return on investment over 90 days.

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

NTG Nordic Transport  vs.  Lennar

NTG Nordic Transport

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NTG Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NTG Nordic and Lennar

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

The idea behind NTG Nordic Transport and Lennar 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.