Correlation Between CENTURIA OFFICE and LGI Homes
Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE and LGI Homes 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 CENTURIA OFFICE and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTURIA OFFICE REIT and LGI Homes, you can compare the effects of market volatilities on CENTURIA OFFICE and LGI Homes 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 CENTURIA OFFICE with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and LGI Homes.
Diversification Opportunities for CENTURIA OFFICE and LGI Homes
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CENTURIA and LGI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and CENTURIA OFFICE 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 CENTURIA OFFICE REIT are associated (or correlated) with LGI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI Homes has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and LGI Homes go up and down completely randomly.
Pair Corralation between CENTURIA OFFICE and LGI Homes
Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to generate 0.57 times more return on investment than LGI Homes. However, CENTURIA OFFICE REIT is 1.77 times less risky than LGI Homes. It trades about 0.03 of its potential returns per unit of risk. LGI Homes is currently generating about 0.0 per unit of risk. If you would invest 71.00 in CENTURIA OFFICE REIT on August 26, 2024 and sell it today you would earn a total of 1.00 from holding CENTURIA OFFICE REIT or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTURIA OFFICE REIT vs. LGI Homes
Performance |
| Timeline |
| CENTURIA OFFICE REIT |
| LGI Homes |
CENTURIA OFFICE and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTURIA OFFICE and LGI Homes
The main advantage of trading using opposite CENTURIA OFFICE and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE position performs unexpectedly, LGI Homes 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 LGI Homes will offset losses from the drop in LGI Homes' long position.| CENTURIA OFFICE vs. FUYO GENERAL LEASE | CENTURIA OFFICE vs. Datadog | CENTURIA OFFICE vs. Science Applications International | CENTURIA OFFICE vs. National Storage Affiliates |
| LGI Homes vs. Norwegian Air Shuttle | LGI Homes vs. Cass Information Systems | LGI Homes vs. DATAGROUP SE | LGI Homes vs. ALTAIR RES INC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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