Correlation Between Inter Parfums and Lennar

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

By analyzing existing cross correlation between Inter Parfums and Lennar 475 percent, you can compare the effects of market volatilities on Inter Parfums 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 Inter Parfums with a short position of Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and Lennar.

Diversification Opportunities for Inter Parfums and Lennar

-0.12

Correlation Coefficient

Inter Parfums  Lennar

Good diversification

The 3 months correlation between Inter and Lennar is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Lennar 475 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar 475 percent and Inter Parfums 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 Inter Parfums 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 475 percent has no effect on the direction of Inter Parfums i.e., Inter Parfums and Lennar go up and down completely randomly.

Pair Corralation between Inter Parfums and Lennar

Given the investment horizon of 90 days Inter Parfums is expected to generate 5.84 times more return on investment than Lennar. However, Inter Parfums is 5.84 times more volatile than Lennar 475 percent. It trades about 0.04 of its potential returns per unit of risk. Lennar 475 percent is currently generating about -0.03 per unit of risk. If you would invest  12,877  in Inter Parfums on September 28, 2024 and sell it today you would earn a total of  409.00  from holding Inter Parfums or generate 3.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Inter Parfums  vs.  Lennar 475 percent

Inter Parfums

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Parfums are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Inter Parfums is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Lennar 475 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lennar 475 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lennar is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inter Parfums and Lennar

The main advantage of trading using opposite Inter Parfums and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums 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 Inter Parfums and Lennar 475 percent 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.