Correlation Between LGI Homes and CENTURIA OFFICE
Can any of the company-specific risk be diversified away by investing in both LGI Homes and CENTURIA OFFICE 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 LGI Homes and CENTURIA OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and CENTURIA OFFICE REIT, you can compare the effects of market volatilities on LGI Homes and CENTURIA OFFICE 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 LGI Homes with a short position of CENTURIA OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and CENTURIA OFFICE.
Diversification Opportunities for LGI Homes and CENTURIA OFFICE
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGI and CENTURIA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT and LGI Homes 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 LGI Homes are associated (or correlated) with CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of LGI Homes i.e., LGI Homes and CENTURIA OFFICE go up and down completely randomly.
Pair Corralation between LGI Homes and CENTURIA OFFICE
Assuming the 90 days trading horizon LGI Homes is expected to generate 2.2 times more return on investment than CENTURIA OFFICE. However, LGI Homes is 2.2 times more volatile than CENTURIA OFFICE REIT. It trades about 0.14 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about 0.11 per unit of risk. If you would invest 9,600 in LGI Homes on August 30, 2024 and sell it today you would earn a total of 800.00 from holding LGI Homes or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LGI Homes vs. CENTURIA OFFICE REIT
Performance |
| Timeline |
| LGI Homes |
| CENTURIA OFFICE REIT |
LGI Homes and CENTURIA OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and CENTURIA OFFICE
The main advantage of trading using opposite LGI Homes and CENTURIA OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, CENTURIA OFFICE 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 CENTURIA OFFICE will offset losses from the drop in CENTURIA OFFICE's long position.| LGI Homes vs. Southwest Airlines Co | LGI Homes vs. STMICROELECTRONICS | LGI Homes vs. BYD ELECTRONIC | LGI Homes vs. United Airlines Holdings |
| CENTURIA OFFICE vs. Media and Games | CENTURIA OFFICE vs. ADRIATIC METALS LS 013355 | CENTURIA OFFICE vs. Scientific Games | CENTURIA OFFICE vs. GameStop Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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