Correlation Between LGI Homes and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Teleflex Incorporated 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 Teleflex Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Teleflex Incorporated, you can compare the effects of market volatilities on LGI Homes and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Teleflex Incorporated.
Diversification Opportunities for LGI Homes and Teleflex Incorporated
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGI and Teleflex is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of LGI Homes i.e., LGI Homes and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between LGI Homes and Teleflex Incorporated
Given the investment horizon of 90 days LGI Homes is expected to generate 0.69 times more return on investment than Teleflex Incorporated. However, LGI Homes is 1.45 times less risky than Teleflex Incorporated. It trades about 0.13 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.24 per unit of risk. If you would invest 10,461 in LGI Homes on August 27, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Teleflex Incorporated
Performance |
| Timeline |
| LGI Homes |
| Teleflex Incorporated |
LGI Homes and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Teleflex Incorporated
The main advantage of trading using opposite LGI Homes and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated'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 |
| Teleflex Incorporated vs. West Pharmaceutical Services | Teleflex Incorporated vs. Alcon AG | Teleflex Incorporated vs. ResMed Inc | Teleflex Incorporated vs. ICU Medical |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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