Correlation Between LGI Homes and Franklin Wireless
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Franklin Wireless 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 Franklin Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Franklin Wireless Corp, you can compare the effects of market volatilities on LGI Homes and Franklin Wireless 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 Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Franklin Wireless.
Diversification Opportunities for LGI Homes and Franklin Wireless
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGI and Franklin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless 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 Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of LGI Homes i.e., LGI Homes and Franklin Wireless go up and down completely randomly.
Pair Corralation between LGI Homes and Franklin Wireless
Given the investment horizon of 90 days LGI Homes is expected to generate 2.91 times less return on investment than Franklin Wireless. In addition to that, LGI Homes is 1.24 times more volatile than Franklin Wireless Corp. It trades about 0.04 of its total potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.13 per unit of volatility. If you would invest 305.00 in Franklin Wireless Corp on August 24, 2024 and sell it today you would earn a total of 125.00 from holding Franklin Wireless Corp or generate 40.98% 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. Franklin Wireless Corp
Performance |
| Timeline |
| LGI Homes |
| Franklin Wireless Corp |
LGI Homes and Franklin Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Franklin Wireless
The main advantage of trading using opposite LGI Homes and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Franklin Wireless 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 Franklin Wireless will offset losses from the drop in Franklin Wireless' 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 |
| Franklin Wireless vs. Wialan Technologies | Franklin Wireless vs. TPT Global Tech | Franklin Wireless vs. Moving iMage Technologies | Franklin Wireless vs. Comtech Telecommunications Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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