Correlation Between LGI Homes and Definitive Healthcare
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Definitive Healthcare 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 Definitive Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Definitive Healthcare Corp, you can compare the effects of market volatilities on LGI Homes and Definitive Healthcare 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 Definitive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Definitive Healthcare.
Diversification Opportunities for LGI Homes and Definitive Healthcare
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGI and Definitive is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare 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 Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of LGI Homes i.e., LGI Homes and Definitive Healthcare go up and down completely randomly.
Pair Corralation between LGI Homes and Definitive Healthcare
Given the investment horizon of 90 days LGI Homes is expected to generate 1.0 times more return on investment than Definitive Healthcare. However, LGI Homes is 1.0 times more volatile than Definitive Healthcare Corp. It trades about 0.13 of its potential returns per unit of risk. Definitive Healthcare Corp is currently generating about 0.11 per unit of risk. If you would invest 10,461 in LGI Homes on August 27, 2024 and sell it today you would earn a total of 661.00 from holding LGI Homes or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Definitive Healthcare Corp
Performance |
| Timeline |
| LGI Homes |
| Definitive Healthcare |
LGI Homes and Definitive Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Definitive Healthcare
The main advantage of trading using opposite LGI Homes and Definitive Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Definitive Healthcare 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 Definitive Healthcare will offset losses from the drop in Definitive Healthcare's long position.| LGI Homes vs. Arhaus Inc | LGI Homes vs. Floor Decor Holdings | LGI Homes vs. Kingfisher plc | LGI Homes vs. Haverty Furniture Companies |
| Definitive Healthcare vs. HealthStream | Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Forian Inc | Definitive Healthcare vs. HealthEquity |
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.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |