Correlation Between LGI Homes and Asure Software
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Asure Software 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 Asure Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Asure Software, you can compare the effects of market volatilities on LGI Homes and Asure Software 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 Asure Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Asure Software.
Diversification Opportunities for LGI Homes and Asure Software
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LGI and Asure is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software 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 Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of LGI Homes i.e., LGI Homes and Asure Software go up and down completely randomly.
Pair Corralation between LGI Homes and Asure Software
Given the investment horizon of 90 days LGI Homes is expected to generate 1.82 times less return on investment than Asure Software. In addition to that, LGI Homes is 1.09 times more volatile than Asure Software. It trades about 0.04 of its total potential returns per unit of risk. Asure Software is currently generating about 0.09 per unit of volatility. If you would invest 762.00 in Asure Software on September 1, 2024 and sell it today you would earn a total of 217.00 from holding Asure Software or generate 28.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Asure Software
Performance |
| Timeline |
| LGI Homes |
| Asure Software |
LGI Homes and Asure Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Asure Software
The main advantage of trading using opposite LGI Homes and Asure Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Asure Software 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 Asure Software will offset losses from the drop in Asure Software's 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 |
| Asure Software vs. Alkami Technology | Asure Software vs. Blackbaud | Asure Software vs. Enfusion | Asure Software vs. Clearwater Analytics Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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