Correlation Between LGI Homes and Kilroy Realty
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Kilroy Realty 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 Kilroy Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Kilroy Realty Corp, you can compare the effects of market volatilities on LGI Homes and Kilroy Realty 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 Kilroy Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Kilroy Realty.
Diversification Opportunities for LGI Homes and Kilroy Realty
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGI and Kilroy is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Kilroy Realty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilroy Realty 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 Kilroy Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilroy Realty Corp has no effect on the direction of LGI Homes i.e., LGI Homes and Kilroy Realty go up and down completely randomly.
Pair Corralation between LGI Homes and Kilroy Realty
Given the investment horizon of 90 days LGI Homes is expected to generate 0.97 times more return on investment than Kilroy Realty. However, LGI Homes is 1.03 times less risky than Kilroy Realty. It trades about 0.07 of its potential returns per unit of risk. Kilroy Realty Corp is currently generating about -0.06 per unit of risk. If you would invest 8,688 in LGI Homes on November 4, 2024 and sell it today you would earn a total of 240.00 from holding LGI Homes or generate 2.76% 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. Kilroy Realty Corp
Performance |
| Timeline |
| LGI Homes |
| Kilroy Realty Corp |
LGI Homes and Kilroy Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Kilroy Realty
The main advantage of trading using opposite LGI Homes and Kilroy Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Kilroy Realty 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 Kilroy Realty will offset losses from the drop in Kilroy Realty'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 |
| Kilroy Realty vs. Hudson Pacific Properties | Kilroy Realty vs. Highwoods Properties | Kilroy Realty vs. Cousins Properties Incorporated | Kilroy Realty vs. Piedmont Office Realty |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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