Correlation Between Landsea Homes and Orange County

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

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

Diversification Opportunities for Landsea Homes and Orange County

0.38

Correlation Coefficient

Landsea Homes  Orange County

Weak diversification

The 3 months correlation between Landsea and Orange is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Landsea Homes Corp and Orange County Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange County Bancorp and Landsea 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 Landsea Homes Corp are associated (or correlated) with Orange County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange County Bancorp has no effect on the direction of Landsea Homes i.e., Landsea Homes and Orange County go up and down completely randomly.

Pair Corralation between Landsea Homes and Orange County

Given the investment horizon of 90 days Landsea Homes Corp is expected to generate 4.59 times more return on investment than Orange County. However, Landsea Homes is 4.59 times more volatile than Orange County Bancorp. It trades about 0.21 of its potential returns per unit of risk. Orange County Bancorp is currently generating about -0.03 per unit of risk. If you would invest  590.00  in Landsea Homes Corp on May 7, 2025 and sell it today you would earn a total of  541.00  from holding Landsea Homes Corp or generate 91.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.66%
Values	Daily Returns

Landsea Homes Corp  vs.  Orange County Bancorp

Landsea Homes Corp

Risk-Adjusted Performance

Solid

Over the last 90 days Landsea Homes Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat fragile technical and fundamental indicators, Landsea Homes sustained solid returns over the last few months and may actually be approaching a breakup point.

Orange County Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orange County Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Orange County is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Landsea Homes and Orange County

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

The idea behind Landsea Homes Corp and Orange County Bancorp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.