Correlation Between STRAYER EDUCATION and LENNAR CORP

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

By analyzing existing cross correlation between STRAYER EDUCATION and LENNAR P B, you can compare the effects of market volatilities on STRAYER EDUCATION and LENNAR CORP 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 STRAYER EDUCATION with a short position of LENNAR CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAYER EDUCATION and LENNAR CORP.

Diversification Opportunities for STRAYER EDUCATION and LENNAR CORP

-0.21

Correlation Coefficient

STRAYER EDUCATION  LENNAR CORP

Very good diversification

The 3 months correlation between STRAYER and LENNAR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION and LENNAR P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENNAR CORP and STRAYER EDUCATION 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 STRAYER EDUCATION are associated (or correlated) with LENNAR CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENNAR CORP has no effect on the direction of STRAYER EDUCATION i.e., STRAYER EDUCATION and LENNAR CORP go up and down completely randomly.

Pair Corralation between STRAYER EDUCATION and LENNAR CORP

Assuming the 90 days trading horizon STRAYER EDUCATION is expected to generate 0.43 times more return on investment than LENNAR CORP. However, STRAYER EDUCATION is 2.32 times less risky than LENNAR CORP. It trades about -0.01 of its potential returns per unit of risk. LENNAR P B is currently generating about -0.13 per unit of risk. If you would invest  9,340  in STRAYER EDUCATION on November 29, 2024 and sell it today you would lose (140.00) from holding STRAYER EDUCATION or give up 1.5% of portfolio value over 90 days.

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

STRAYER EDUCATION  vs.  LENNAR P B

STRAYER EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days STRAYER EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, STRAYER EDUCATION is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

LENNAR CORP

Risk-Adjusted Performance

Very Weak

Over the last 90 days LENNAR P B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with STRAYER EDUCATION and LENNAR CORP

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

The idea behind STRAYER EDUCATION and LENNAR P B 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.