Correlation Between Liberty Broadband and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband 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 Liberty Broadband and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and LGI Homes, you can compare the effects of market volatilities on Liberty Broadband 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 Liberty Broadband with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and LGI Homes.
Diversification Opportunities for Liberty Broadband and LGI Homes
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liberty and LGI is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Liberty Broadband 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 Liberty Broadband 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 Liberty Broadband i.e., Liberty Broadband and LGI Homes go up and down completely randomly.
Pair Corralation between Liberty Broadband and LGI Homes
Assuming the 90 days horizon Liberty Broadband is expected to generate 1.05 times more return on investment than LGI Homes. However, Liberty Broadband is 1.05 times more volatile than LGI Homes. It trades about 0.02 of its potential returns per unit of risk. LGI Homes is currently generating about -0.04 per unit of risk. If you would invest 7,850 in Liberty Broadband on September 20, 2024 and sell it today you would earn a total of 280.00 from holding Liberty Broadband or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Liberty Broadband vs. LGI Homes
Performance |
| Timeline |
| Liberty Broadband |
| LGI Homes |
Liberty Broadband and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and LGI Homes
The main advantage of trading using opposite Liberty Broadband and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband 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.| Liberty Broadband vs. LGI Homes | Liberty Broadband vs. Bassett Furniture Industries | Liberty Broadband vs. Valens | Liberty Broadband vs. Micron Technology |
| LGI Homes vs. Arhaus Inc | LGI Homes vs. Floor Decor Holdings | LGI Homes vs. Kingfisher plc | LGI Homes vs. Haverty Furniture Companies |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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