Correlation Between LGI Homes and TradeUP Acquisition
Can any of the company-specific risk be diversified away by investing in both LGI Homes and TradeUP Acquisition 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 TradeUP Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and TradeUP Acquisition Corp, you can compare the effects of market volatilities on LGI Homes and TradeUP Acquisition 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 TradeUP Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and TradeUP Acquisition.
Diversification Opportunities for LGI Homes and TradeUP Acquisition
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LGI and TradeUP is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and TradeUP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TradeUP Acquisition 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 TradeUP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TradeUP Acquisition Corp has no effect on the direction of LGI Homes i.e., LGI Homes and TradeUP Acquisition go up and down completely randomly.
Pair Corralation between LGI Homes and TradeUP Acquisition
Given the investment horizon of 90 days LGI Homes is expected to under-perform the TradeUP Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, LGI Homes is 8.69 times less risky than TradeUP Acquisition. The stock trades about 0.0 of its potential returns per unit of risk. The TradeUP Acquisition Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5.29 in TradeUP Acquisition Corp on September 2, 2024 and sell it today you would earn a total of 8.71 from holding TradeUP Acquisition Corp or generate 164.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 6.45% |
| Values | Daily Returns |
LGI Homes vs. TradeUP Acquisition Corp
Performance |
| Timeline |
| LGI Homes |
| TradeUP Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LGI Homes and TradeUP Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and TradeUP Acquisition
The main advantage of trading using opposite LGI Homes and TradeUP Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, TradeUP Acquisition 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 TradeUP Acquisition will offset losses from the drop in TradeUP Acquisition'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 |
| TradeUP Acquisition vs. Citi Trends | TradeUP Acquisition vs. Mediag3 | TradeUP Acquisition vs. Victorias Secret Co | TradeUP Acquisition vs. Silo Pharma |
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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