Correlation Between LGI Homes and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Perseus Mining 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 Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Perseus Mining Limited, you can compare the effects of market volatilities on LGI Homes and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Perseus Mining.
Diversification Opportunities for LGI Homes and Perseus Mining
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between LGI and Perseus is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of LGI Homes i.e., LGI Homes and Perseus Mining go up and down completely randomly.
Pair Corralation between LGI Homes and Perseus Mining
Given the investment horizon of 90 days LGI Homes is expected to generate 0.63 times more return on investment than Perseus Mining. However, LGI Homes is 1.58 times less risky than Perseus Mining. It trades about 0.13 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.06 per unit of risk. If you would invest 10,461 in LGI Homes on August 28, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Perseus Mining Limited
Performance |
| Timeline |
| LGI Homes |
| Perseus Mining |
LGI Homes and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Perseus Mining
The main advantage of trading using opposite LGI Homes and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining'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 |
| Perseus Mining vs. Aurion Resources | Perseus Mining vs. Liberty Gold Corp | Perseus Mining vs. Orezone Gold Corp | Perseus Mining vs. Radisson Mining Resources |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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