Correlation Between Skyline and Legacy Housing
Can any of the company-specific risk be diversified away by investing in both Skyline and Legacy Housing 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 Skyline and Legacy Housing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skyline and Legacy Housing Corp, you can compare the effects of market volatilities on Skyline and Legacy Housing 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 Skyline with a short position of Legacy Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skyline and Legacy Housing.
Diversification Opportunities for Skyline and Legacy Housing
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Skyline and Legacy is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Skyline and Legacy Housing Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Housing Corp and Skyline 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 Skyline are associated (or correlated) with Legacy Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Housing Corp has no effect on the direction of Skyline i.e., Skyline and Legacy Housing go up and down completely randomly.
Pair Corralation between Skyline and Legacy Housing
Considering the 90-day investment horizon Skyline is expected to generate 0.75 times more return on investment than Legacy Housing. However, Skyline is 1.33 times less risky than Legacy Housing. It trades about 0.42 of its potential returns per unit of risk. Legacy Housing Corp is currently generating about 0.09 per unit of risk. If you would invest 9,085 in Skyline on August 28, 2024 and sell it today you would earn a total of 1,340 from holding Skyline or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skyline vs. Legacy Housing Corp
Performance |
| Timeline |
| Skyline |
| Legacy Housing Corp |
Skyline and Legacy Housing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skyline and Legacy Housing
The main advantage of trading using opposite Skyline and Legacy Housing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyline position performs unexpectedly, Legacy Housing 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 Legacy Housing will offset losses from the drop in Legacy Housing's long position.| Skyline vs. MI Homes | Skyline vs. Century Communities | Skyline vs. Installed Building Products | Skyline vs. Legacy Housing Corp |
| Legacy Housing vs. MI Homes | Legacy Housing vs. Taylor Morn Home | Legacy Housing vs. TRI Pointe Homes | Legacy Housing vs. Beazer Homes USA |
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 Stocks Directory module to find actively traded stocks across global markets.
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