Correlation Between Envista Holdings and United Homes

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

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

Diversification Opportunities for Envista Holdings and United Homes

0.52

Correlation Coefficient

Envista Holdings  United Homes

Very weak diversification

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

Pair Corralation between Envista Holdings and United Homes

Given the investment horizon of 90 days Envista Holdings Corp is expected to under-perform the United Homes. But the stock apears to be less risky and, when comparing its historical volatility, Envista Holdings Corp is 3.06 times less risky than United Homes. The stock trades about -0.05 of its potential returns per unit of risk. The United Homes Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,026  in United Homes Group on October 23, 2024 and sell it today you would lose (575.00) from holding United Homes Group or give up 56.04% of portfolio value over 90 days.

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

Envista Holdings Corp  vs.  United Homes Group

Envista Holdings Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Envista Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

United Homes Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Homes Group 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 indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Envista Holdings and United Homes

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

The idea behind Envista Holdings Corp and United Homes 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.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.