Correlation Between LGI Homes and Ecovyst
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Ecovyst 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 Ecovyst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Ecovyst, you can compare the effects of market volatilities on LGI Homes and Ecovyst 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 Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Ecovyst.
Diversification Opportunities for LGI Homes and Ecovyst
Very good diversification
The 3 months correlation between LGI and Ecovyst is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst 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 Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of LGI Homes i.e., LGI Homes and Ecovyst go up and down completely randomly.
Pair Corralation between LGI Homes and Ecovyst
Given the investment horizon of 90 days LGI Homes is expected to generate 1.11 times more return on investment than Ecovyst. However, LGI Homes is 1.11 times more volatile than Ecovyst. It trades about 0.0 of its potential returns per unit of risk. Ecovyst is currently generating about -0.01 per unit of risk. If you would invest 11,857 in LGI Homes on August 27, 2024 and sell it today you would lose (1,275) from holding LGI Homes or give up 10.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Ecovyst
Performance |
| Timeline |
| LGI Homes |
| Ecovyst |
LGI Homes and Ecovyst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Ecovyst
The main advantage of trading using opposite LGI Homes and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst'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 |
| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |