Correlation Between Suburban Propane and Lennar

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

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

Diversification Opportunities for Suburban Propane and Lennar

-0.06

Correlation Coefficient

Suburban Propane  Lennar

Good diversification

The 3 months correlation between Suburban and Lennar is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners 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 Suburban Propane 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 Suburban Propane Partners 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 Suburban Propane i.e., Suburban Propane and Lennar go up and down completely randomly.

Pair Corralation between Suburban Propane and Lennar

Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 11.66 times more return on investment than Lennar. However, Suburban Propane is 11.66 times more volatile than Lennar 475 percent. It trades about 0.01 of its potential returns per unit of risk. Lennar 475 percent is currently generating about -0.04 per unit of risk. If you would invest  1,732  in Suburban Propane Partners on September 25, 2024 and sell it today you would lose (4.00) from holding Suburban Propane Partners or give up 0.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Suburban Propane Partners  vs.  Lennar 475 percent

Suburban Propane Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suburban Propane Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 Suburban Propane and Lennar

The main advantage of trading using opposite Suburban Propane and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane 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 Suburban Propane Partners 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.