Correlation Between Taylor Morrison and LBG MEDIA

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Can any of the company-specific risk be diversified away by investing in both Taylor Morrison and LBG MEDIA 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 Taylor Morrison and LBG MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taylor Morrison Home and LBG MEDIA PLC, you can compare the effects of market volatilities on Taylor Morrison and LBG MEDIA 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 Taylor Morrison with a short position of LBG MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taylor Morrison and LBG MEDIA.

Diversification Opportunities for Taylor Morrison and LBG MEDIA

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Taylor and LBG is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Morrison Home and LBG MEDIA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG MEDIA PLC and Taylor Morrison 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 Taylor Morrison Home are associated (or correlated) with LBG MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG MEDIA PLC has no effect on the direction of Taylor Morrison i.e., Taylor Morrison and LBG MEDIA go up and down completely randomly.

Pair Corralation between Taylor Morrison and LBG MEDIA

Assuming the 90 days trading horizon Taylor Morrison is expected to generate 1.34 times less return on investment than LBG MEDIA. But when comparing it to its historical volatility, Taylor Morrison Home is 1.41 times less risky than LBG MEDIA. It trades about 0.05 of its potential returns per unit of risk. LBG MEDIA PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  106.00  in LBG MEDIA PLC on April 20, 2025 and sell it today you would earn a total of  6.00  from holding LBG MEDIA PLC or generate 5.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Taylor Morrison Home  vs.  LBG MEDIA PLC

 Performance 
       Timeline  
Taylor Morrison Home 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Taylor Morrison Home are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Taylor Morrison is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
LBG MEDIA PLC 

Risk-Adjusted Performance

Weak

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

Taylor Morrison and LBG MEDIA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Taylor Morrison and LBG MEDIA

The main advantage of trading using opposite Taylor Morrison and LBG MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Morrison position performs unexpectedly, LBG MEDIA 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 LBG MEDIA will offset losses from the drop in LBG MEDIA's long position.
The idea behind Taylor Morrison Home and LBG MEDIA PLC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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