Correlation Between Lennar and Reynolds Consumer

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

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

Diversification Opportunities for Lennar and Reynolds Consumer

0.0

Correlation Coefficient

Lennar  Reynolds Consumer

Pay attention - limited upside

The 3 months correlation between Lennar and Reynolds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lennar and Reynolds Consumer Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reynolds Consumer and Lennar 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 Lennar are associated (or correlated) with Reynolds Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reynolds Consumer has no effect on the direction of Lennar i.e., Lennar and Reynolds Consumer go up and down completely randomly.

Pair Corralation between Lennar and Reynolds Consumer

Assuming the 90 days horizon Lennar is expected to generate 1.85 times more return on investment than Reynolds Consumer. However, Lennar is 1.85 times more volatile than Reynolds Consumer Products. It trades about 0.08 of its potential returns per unit of risk. Reynolds Consumer Products is currently generating about -0.03 per unit of risk. If you would invest  10,261  in Lennar on May 7, 2025 and sell it today you would earn a total of  1,071  from holding Lennar or generate 10.44% return on investment over 90 days.

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

Lennar  vs.  Reynolds Consumer Products

Lennar

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lennar are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lennar may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Reynolds Consumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reynolds Consumer Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Reynolds Consumer is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lennar and Reynolds Consumer

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

The idea behind Lennar and Reynolds Consumer Products 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.