Correlation Between LGI Homes and Welcia Holdings
Can any of the company-specific risk be diversified away by investing in both LGI Homes and Welcia Holdings 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 Welcia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Welcia Holdings Co, you can compare the effects of market volatilities on LGI Homes and Welcia Holdings 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 Welcia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Welcia Holdings.
Diversification Opportunities for LGI Homes and Welcia Holdings
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between LGI and Welcia is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Welcia Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welcia Holdings 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 Welcia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welcia Holdings has no effect on the direction of LGI Homes i.e., LGI Homes and Welcia Holdings go up and down completely randomly.
Pair Corralation between LGI Homes and Welcia Holdings
If you would invest 9,486 in LGI Homes on September 14, 2024 and sell it today you would earn a total of 753.00 from holding LGI Homes or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.8% |
| Values | Daily Returns |
LGI Homes vs. Welcia Holdings Co
Performance |
| Timeline |
| LGI Homes |
| Welcia Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LGI Homes and Welcia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Welcia Holdings
The main advantage of trading using opposite LGI Homes and Welcia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Welcia Holdings 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 Welcia Holdings will offset losses from the drop in Welcia Holdings' 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 |
| Welcia Holdings vs. Celsius Holdings | Welcia Holdings vs. Molson Coors Brewing | Welcia Holdings vs. LGI Homes | Welcia Holdings vs. ScanSource |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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