Correlation Between Legacy Housing and Bloomin Brands

Can any of the company-specific risk be diversified away by investing in both Legacy Housing and Bloomin Brands 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 Bloomin Brands 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 Bloomin Brands, you can compare the effects of market volatilities on Legacy Housing and Bloomin Brands 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 Bloomin Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Housing and Bloomin Brands.

Diversification Opportunities for Legacy Housing and Bloomin Brands

-0.41

Correlation Coefficient

Legacy Housing  Bloomin Brands

Very good diversification

The 3 months correlation between Legacy and Bloomin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Housing Corp and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin Brands 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 Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Legacy Housing i.e., Legacy Housing and Bloomin Brands go up and down completely randomly.

Pair Corralation between Legacy Housing and Bloomin Brands

Given the investment horizon of 90 days Legacy Housing Corp is expected to generate 0.45 times more return on investment than Bloomin Brands. However, Legacy Housing Corp is 2.24 times less risky than Bloomin Brands. It trades about -0.02 of its potential returns per unit of risk. Bloomin Brands is currently generating about -0.05 per unit of risk. If you would invest  2,351  in Legacy Housing Corp on August 5, 2025 and sell it today you would lose (105.00) from holding Legacy Housing Corp or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Legacy Housing Corp  vs.  Bloomin Brands

Legacy Housing Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Legacy Housing Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Legacy Housing is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Bloomin Brands

Risk-Adjusted Performance

Weakest

Over the last 90 days Bloomin Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in December 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Legacy Housing and Bloomin Brands

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

The idea behind Legacy Housing Corp and Bloomin Brands 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.