Correlation Between Hochschild Mining and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining 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 Hochschild Mining and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochschild Mining plc and LGI Homes, you can compare the effects of market volatilities on Hochschild Mining 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 Hochschild Mining with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and LGI Homes.
Diversification Opportunities for Hochschild Mining and LGI Homes
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hochschild and LGI is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Hochschild Mining 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 Hochschild Mining plc 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 Hochschild Mining i.e., Hochschild Mining and LGI Homes go up and down completely randomly.
Pair Corralation between Hochschild Mining and LGI Homes
Assuming the 90 days horizon Hochschild Mining plc is expected to generate 1.35 times more return on investment than LGI Homes. However, Hochschild Mining is 1.35 times more volatile than LGI Homes. It trades about 0.12 of its potential returns per unit of risk. LGI Homes is currently generating about 0.05 per unit of risk. If you would invest 202.00 in Hochschild Mining plc on August 31, 2024 and sell it today you would earn a total of 54.00 from holding Hochschild Mining plc or generate 26.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochschild Mining plc vs. LGI Homes
Performance |
| Timeline |
| Hochschild Mining plc |
| LGI Homes |
Hochschild Mining and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and LGI Homes
The main advantage of trading using opposite Hochschild Mining and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining 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.| Hochschild Mining vs. Carsales | Hochschild Mining vs. GEELY AUTOMOBILE | Hochschild Mining vs. The Hanover Insurance | Hochschild Mining vs. OFFICE DEPOT |
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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