Correlation Between Landsea Homes and Safe

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

By analyzing existing cross correlation between Landsea Homes Corp and Safe and Green, you can compare the effects of market volatilities on Landsea Homes and Safe 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 Safe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landsea Homes and Safe.

Diversification Opportunities for Landsea Homes and Safe

0.65

Correlation Coefficient

Landsea Homes  Safe

Poor diversification

The 3 months correlation between Landsea and Safe is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Landsea Homes Corp and Safe and Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe and Green 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 Corp are associated (or correlated) with Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe and Green has no effect on the direction of Landsea Homes i.e., Landsea Homes and Safe go up and down completely randomly.

Pair Corralation between Landsea Homes and Safe

Given the investment horizon of 90 days Landsea Homes Corp is expected to generate 0.45 times more return on investment than Safe. However, Landsea Homes Corp is 2.22 times less risky than Safe. It trades about 0.0 of its potential returns per unit of risk. Safe and Green is currently generating about -0.1 per unit of risk. If you would invest  1,065  in Landsea Homes Corp on September 13, 2024 and sell it today you would lose (58.00) from holding Landsea Homes Corp or give up 5.45% of portfolio value over 90 days.

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

Landsea Homes Corp  vs.  Safe and Green

Landsea Homes Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landsea Homes Corp 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 technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Safe and Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Landsea Homes and Safe

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

The idea behind Landsea Homes Corp and Safe and Green 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.