Correlation Between LGI Homes and 874054AF6

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Can any of the company-specific risk be diversified away by investing in both LGI Homes and 874054AF6 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 874054AF6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and TTWO 355 14 APR 25, you can compare the effects of market volatilities on LGI Homes and 874054AF6 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 874054AF6. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and 874054AF6.

Diversification Opportunities for LGI Homes and 874054AF6

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between LGI and 874054AF6 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and TTWO 355 14 APR 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTWO 355 14 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 874054AF6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTWO 355 14 has no effect on the direction of LGI Homes i.e., LGI Homes and 874054AF6 go up and down completely randomly.

Pair Corralation between LGI Homes and 874054AF6

Given the investment horizon of 90 days LGI Homes is expected to generate 6.15 times more return on investment than 874054AF6. However, LGI Homes is 6.15 times more volatile than TTWO 355 14 APR 25. It trades about 0.07 of its potential returns per unit of risk. TTWO 355 14 APR 25 is currently generating about -0.24 per unit of risk. If you would invest  8,689  in LGI Homes on November 5, 2024 and sell it today you would earn a total of  239.00  from holding LGI Homes or generate 2.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy90.48%
ValuesDaily Returns

LGI Homes  vs.  TTWO 355 14 APR 25

 Performance 
       Timeline  
LGI Homes 

Risk-Adjusted Performance

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Over the last 90 days LGI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
TTWO 355 14 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days TTWO 355 14 APR 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 874054AF6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

LGI Homes and 874054AF6 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LGI Homes and 874054AF6

The main advantage of trading using opposite LGI Homes and 874054AF6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, 874054AF6 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 874054AF6 will offset losses from the drop in 874054AF6's long position.
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The idea behind LGI Homes and TTWO 355 14 APR 25 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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