Correlation Between LGI Homes and Churchill Capital
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Churchill Capital 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 Churchill Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Churchill Capital Corp, you can compare the effects of market volatilities on LGI Homes and Churchill Capital 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 Churchill Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Churchill Capital.
Diversification Opportunities for LGI Homes and Churchill Capital
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGI and Churchill is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Churchill Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Capital Corp 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 Churchill Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Capital Corp has no effect on the direction of LGI Homes i.e., LGI Homes and Churchill Capital go up and down completely randomly.
Pair Corralation between LGI Homes and Churchill Capital
Given the investment horizon of 90 days LGI Homes is expected to under-perform the Churchill Capital. In addition to that, LGI Homes is 5.87 times more volatile than Churchill Capital Corp. It trades about -0.33 of its total potential returns per unit of risk. Churchill Capital Corp is currently generating about 0.24 per unit of volatility. If you would invest 1,031 in Churchill Capital Corp on November 28, 2024 and sell it today you would earn a total of 23.00 from holding Churchill Capital Corp or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Churchill Capital Corp
Performance |
| Timeline |
| LGI Homes |
| Churchill Capital Corp |
LGI Homes and Churchill Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Churchill Capital
The main advantage of trading using opposite LGI Homes and Churchill Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Churchill Capital 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 Churchill Capital will offset losses from the drop in Churchill Capital'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 |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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