Correlation Between Ecovyst and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Ecovyst 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 Ecovyst and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecovyst and LGI Homes, you can compare the effects of market volatilities on Ecovyst 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 Ecovyst with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecovyst and LGI Homes.
Diversification Opportunities for Ecovyst and LGI Homes
Very good diversification
The 3 months correlation between Ecovyst and LGI is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Ecovyst 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 Ecovyst 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 Ecovyst i.e., Ecovyst and LGI Homes go up and down completely randomly.
Pair Corralation between Ecovyst and LGI Homes
Given the investment horizon of 90 days Ecovyst is expected to under-perform the LGI Homes. But the stock apears to be less risky and, when comparing its historical volatility, Ecovyst is 1.12 times less risky than LGI Homes. The stock trades about -0.01 of its potential returns per unit of risk. The LGI Homes is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,551 in LGI Homes on August 31, 2024 and sell it today you would lose (521.00) from holding LGI Homes or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecovyst vs. LGI Homes
Performance |
| Timeline |
| Ecovyst |
| LGI Homes |
Ecovyst and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecovyst and LGI Homes
The main advantage of trading using opposite Ecovyst and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst 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.| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |