Correlation Between DATAGROUP and LGI Homes
Can any of the company-specific risk be diversified away by investing in both DATAGROUP 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 DATAGROUP and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATAGROUP SE and LGI Homes, you can compare the effects of market volatilities on DATAGROUP 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 DATAGROUP with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATAGROUP and LGI Homes.
Diversification Opportunities for DATAGROUP and LGI Homes
Average diversification
The 3 months correlation between DATAGROUP and LGI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding DATAGROUP SE and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and DATAGROUP 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 DATAGROUP SE 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 DATAGROUP i.e., DATAGROUP and LGI Homes go up and down completely randomly.
Pair Corralation between DATAGROUP and LGI Homes
Assuming the 90 days trading horizon DATAGROUP is expected to generate 1.03 times less return on investment than LGI Homes. In addition to that, DATAGROUP is 1.32 times more volatile than LGI Homes. It trades about 0.07 of its total potential returns per unit of risk. LGI Homes is currently generating about 0.1 per unit of volatility. If you would invest 9,500 in LGI Homes on August 26, 2024 and sell it today you would earn a total of 450.00 from holding LGI Homes or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATAGROUP SE vs. LGI Homes
Performance |
| Timeline |
| DATAGROUP SE |
| LGI Homes |
DATAGROUP and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATAGROUP and LGI Homes
The main advantage of trading using opposite DATAGROUP and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATAGROUP 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.| DATAGROUP vs. PKSHA TECHNOLOGY INC | DATAGROUP vs. FANDIFI TECHNOLOGY P | DATAGROUP vs. Sporttotal AG | DATAGROUP vs. Check Point Software |
| 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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