Correlation Between Amer Sports, and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Amer Sports, 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 Amer Sports, and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amer Sports, and LGI Homes, you can compare the effects of market volatilities on Amer Sports, 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 Amer Sports, with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Sports, and LGI Homes.
Diversification Opportunities for Amer Sports, and LGI Homes
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amer and LGI is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Amer Sports, and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Amer Sports, 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 Amer Sports, 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 Amer Sports, i.e., Amer Sports, and LGI Homes go up and down completely randomly.
Pair Corralation between Amer Sports, and LGI Homes
Allowing for the 90-day total investment horizon Amer Sports, is expected to generate 0.94 times more return on investment than LGI Homes. However, Amer Sports, is 1.06 times less risky than LGI Homes. It trades about 0.21 of its potential returns per unit of risk. LGI Homes is currently generating about 0.07 per unit of risk. If you would invest 2,750 in Amer Sports, on October 20, 2024 and sell it today you would earn a total of 226.00 from holding Amer Sports, or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Amer Sports, vs. LGI Homes
Performance |
| Timeline |
| Amer Sports, |
| LGI Homes |
Amer Sports, and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amer Sports, and LGI Homes
The main advantage of trading using opposite Amer Sports, and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Sports, 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.| Amer Sports, vs. Lipocine | Amer Sports, vs. Canlan Ice Sports | Amer Sports, vs. MYT Netherlands Parent | Amer Sports, vs. Verra Mobility Corp |
| LGI Homes vs. MI Homes | LGI Homes vs. Taylor Morn Home | LGI Homes vs. TRI Pointe Homes | LGI Homes vs. Beazer Homes USA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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