Correlation Between Legacy Housing and Meritage

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

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

Diversification Opportunities for Legacy Housing and Meritage

0.82

Correlation Coefficient

Legacy Housing  Meritage

Very poor diversification

The 3 months correlation between Legacy and Meritage is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Housing Corp and Meritage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meritage and Legacy Housing 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 Legacy Housing Corp are associated (or correlated) with Meritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meritage has no effect on the direction of Legacy Housing i.e., Legacy Housing and Meritage go up and down completely randomly.

Pair Corralation between Legacy Housing and Meritage

Given the investment horizon of 90 days Legacy Housing Corp is expected to generate 0.96 times more return on investment than Meritage. However, Legacy Housing Corp is 1.04 times less risky than Meritage. It trades about 0.06 of its potential returns per unit of risk. Meritage is currently generating about 0.05 per unit of risk. If you would invest  2,238  in Legacy Housing Corp on July 30, 2025 and sell it today you would earn a total of  161.00  from holding Legacy Housing Corp or generate 7.19% return on investment over 90 days.

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

Legacy Housing Corp  vs.  Meritage

Legacy Housing Corp

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Legacy Housing Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Legacy Housing may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Meritage

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Meritage are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Meritage may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Legacy Housing and Meritage

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

The idea behind Legacy Housing Corp and Meritage 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.