Correlation Between LGI Homes and TSOGO SUN
Can any of the company-specific risk be diversified away by investing in both LGI Homes and TSOGO SUN 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 TSOGO SUN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and TSOGO SUN GAMING, you can compare the effects of market volatilities on LGI Homes and TSOGO SUN 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 TSOGO SUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and TSOGO SUN.
Diversification Opportunities for LGI Homes and TSOGO SUN
Excellent diversification
The 3 months correlation between LGI and TSOGO is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and TSOGO SUN GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSOGO SUN GAMING 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 TSOGO SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSOGO SUN GAMING has no effect on the direction of LGI Homes i.e., LGI Homes and TSOGO SUN go up and down completely randomly.
Pair Corralation between LGI Homes and TSOGO SUN
Assuming the 90 days trading horizon LGI Homes is expected to under-perform the TSOGO SUN. In addition to that, LGI Homes is 1.09 times more volatile than TSOGO SUN GAMING. It trades about -0.13 of its total potential returns per unit of risk. TSOGO SUN GAMING is currently generating about -0.09 per unit of volatility. If you would invest 49.00 in TSOGO SUN GAMING on December 11, 2024 and sell it today you would lose (5.00) from holding TSOGO SUN GAMING or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. TSOGO SUN GAMING
Performance |
| Timeline |
| LGI Homes |
| TSOGO SUN GAMING |
LGI Homes and TSOGO SUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and TSOGO SUN
The main advantage of trading using opposite LGI Homes and TSOGO SUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, TSOGO SUN 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 TSOGO SUN will offset losses from the drop in TSOGO SUN's long position.| LGI Homes vs. Constellation Software | LGI Homes vs. Automatic Data Processing | LGI Homes vs. DICKER DATA LTD | LGI Homes vs. OPERA SOFTWARE |
| TSOGO SUN vs. Wayside Technology Group | TSOGO SUN vs. THRACE PLASTICS | TSOGO SUN vs. Computer And Technologies | TSOGO SUN vs. ASURE SOFTWARE |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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