Correlation Between Meritage Homes and HAVERTY FURNITURE

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

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

Diversification Opportunities for Meritage Homes and HAVERTY FURNITURE

0.02

Correlation Coefficient

Meritage Homes  HAVERTY FURNITURE

Significant diversification

The 3 months correlation between Meritage and HAVERTY is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Meritage Homes and HAVERTY FURNITURE A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVERTY FURNITURE and Meritage 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 Meritage Homes are associated (or correlated) with HAVERTY FURNITURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVERTY FURNITURE has no effect on the direction of Meritage Homes i.e., Meritage Homes and HAVERTY FURNITURE go up and down completely randomly.

Pair Corralation between Meritage Homes and HAVERTY FURNITURE

Assuming the 90 days horizon Meritage Homes is expected to generate 6.97 times less return on investment than HAVERTY FURNITURE. But when comparing it to its historical volatility, Meritage Homes is 1.24 times less risky than HAVERTY FURNITURE. It trades about 0.02 of its potential returns per unit of risk. HAVERTY FURNITURE A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,389  in HAVERTY FURNITURE A on April 23, 2025 and sell it today you would earn a total of  301.00  from holding HAVERTY FURNITURE A or generate 21.67% return on investment over 90 days.

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

Meritage Homes  vs.  HAVERTY FURNITURE A

Meritage Homes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meritage Homes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Meritage Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HAVERTY FURNITURE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HAVERTY FURNITURE A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, HAVERTY FURNITURE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meritage Homes and HAVERTY FURNITURE

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

The idea behind Meritage Homes and HAVERTY FURNITURE A 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.