Correlation Between LGI Homes and Fluent
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Fluent 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 Fluent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Fluent Inc, you can compare the effects of market volatilities on LGI Homes and Fluent 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 Fluent. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Fluent.
Diversification Opportunities for LGI Homes and Fluent
Average diversification
The 3 months correlation between LGI and Fluent is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Fluent Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluent Inc 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 Fluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluent Inc has no effect on the direction of LGI Homes i.e., LGI Homes and Fluent go up and down completely randomly.
Pair Corralation between LGI Homes and Fluent
Given the investment horizon of 90 days LGI Homes is expected to under-perform the Fluent. But the stock apears to be less risky and, when comparing its historical volatility, LGI Homes is 1.66 times less risky than Fluent. The stock trades about 0.0 of its potential returns per unit of risk. The Fluent Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 387.00 in Fluent Inc on August 31, 2024 and sell it today you would lose (111.00) from holding Fluent Inc or give up 28.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Fluent Inc
Performance |
| Timeline |
| LGI Homes |
| Fluent Inc |
LGI Homes and Fluent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Fluent
The main advantage of trading using opposite LGI Homes and Fluent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Fluent 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 Fluent will offset losses from the drop in Fluent'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 |
| Fluent vs. Marchex | Fluent vs. Dolphin Entertainment | Fluent vs. Beyond Commerce | Fluent vs. MGO Global Common |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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