Correlation Between LGI Homes and Aerofoam Metals
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Aerofoam Metals 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 Aerofoam Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Aerofoam Metals, you can compare the effects of market volatilities on LGI Homes and Aerofoam Metals 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 Aerofoam Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Aerofoam Metals.
Diversification Opportunities for LGI Homes and Aerofoam Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGI and Aerofoam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Aerofoam Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerofoam Metals 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 Aerofoam Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerofoam Metals has no effect on the direction of LGI Homes i.e., LGI Homes and Aerofoam Metals go up and down completely randomly.
Pair Corralation between LGI Homes and Aerofoam Metals
If you would invest 10,431 in LGI Homes on August 31, 2024 and sell it today you would earn a total of 599.00 from holding LGI Homes or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Aerofoam Metals
Performance |
| Timeline |
| LGI Homes |
| Aerofoam Metals |
LGI Homes and Aerofoam Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Aerofoam Metals
The main advantage of trading using opposite LGI Homes and Aerofoam Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Aerofoam Metals 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 Aerofoam Metals will offset losses from the drop in Aerofoam Metals' long position.| LGI Homes vs. MI Homes | LGI Homes vs. Taylor Morn Home | LGI Homes vs. TRI Pointe Homes | LGI Homes vs. Beazer Homes USA |
| Aerofoam Metals vs. Porsche Automobile Holding | Aerofoam Metals vs. Ferrari NV | Aerofoam Metals vs. Toyota Motor | Aerofoam Metals vs. General Motors |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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