Correlation Between TRI Pointe and Meritage
Can any of the company-specific risk be diversified away by investing in both TRI Pointe and Meritage 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 TRI Pointe and Meritage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRI Pointe Homes and Meritage, you can compare the effects of market volatilities on TRI Pointe and Meritage 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 TRI Pointe with a short position of Meritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRI Pointe and Meritage.
Diversification Opportunities for TRI Pointe and Meritage
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TRI and Meritage is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding TRI Pointe Homes and Meritage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meritage and TRI Pointe 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 TRI Pointe Homes are associated (or correlated) with Meritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meritage has no effect on the direction of TRI Pointe i.e., TRI Pointe and Meritage go up and down completely randomly.
Pair Corralation between TRI Pointe and Meritage
Considering the 90-day investment horizon TRI Pointe is expected to generate 1.28 times less return on investment than Meritage. But when comparing it to its historical volatility, TRI Pointe Homes is 1.08 times less risky than Meritage. It trades about 0.03 of its potential returns per unit of risk. Meritage is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,769 in Meritage on April 30, 2025 and sell it today you would earn a total of 268.00 from holding Meritage or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRI Pointe Homes vs. Meritage
Performance |
| Timeline |
| TRI Pointe Homes |
| Meritage |
TRI Pointe and Meritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRI Pointe and Meritage
The main advantage of trading using opposite TRI Pointe and Meritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRI Pointe position performs unexpectedly, Meritage 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 Meritage will offset losses from the drop in Meritage's long position.| TRI Pointe vs. Api Group Corp | TRI Pointe vs. MYR Group | TRI Pointe vs. Comfort Systems USA | TRI Pointe vs. Construction Partners |
| Meritage vs. Api Group Corp | Meritage vs. MYR Group | Meritage vs. Comfort Systems USA | Meritage vs. Construction Partners |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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