Correlation Between Simon Property and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Simon Property and LGI Homes 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 Simon Property and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and LGI Homes, you can compare the effects of market volatilities on Simon Property and LGI Homes 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 Simon Property with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and LGI Homes.
Diversification Opportunities for Simon Property and LGI Homes
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simon and LGI is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Simon Property 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 Simon Property Group are associated (or correlated) with LGI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI Homes has no effect on the direction of Simon Property i.e., Simon Property and LGI Homes go up and down completely randomly.
Pair Corralation between Simon Property and LGI Homes
Considering the 90-day investment horizon Simon Property Group is expected to generate 0.37 times more return on investment than LGI Homes. However, Simon Property Group is 2.7 times less risky than LGI Homes. It trades about 0.01 of its potential returns per unit of risk. LGI Homes is currently generating about -0.02 per unit of risk. If you would invest 17,712 in Simon Property Group on September 14, 2024 and sell it today you would earn a total of 8.00 from holding Simon Property Group or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. LGI Homes
Performance |
| Timeline |
| Simon Property Group |
| LGI Homes |
Simon Property and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and LGI Homes
The main advantage of trading using opposite Simon Property and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, LGI Homes 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 LGI Homes will offset losses from the drop in LGI Homes' long position.| Simon Property vs. Site Centers Corp | Simon Property vs. CBL Associates Properties | Simon Property vs. Urban Edge Properties | Simon Property vs. Acadia Realty Trust |
| LGI Homes vs. MI Homes | LGI Homes vs. Taylor Morn Home | LGI Homes vs. TRI Pointe Homes | LGI Homes 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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