Correlation Between SPARTAN STORES and LGI Homes
Can any of the company-specific risk be diversified away by investing in both SPARTAN STORES 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 SPARTAN STORES and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPARTAN STORES and LGI Homes, you can compare the effects of market volatilities on SPARTAN STORES 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 SPARTAN STORES with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and LGI Homes.
Diversification Opportunities for SPARTAN STORES and LGI Homes
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPARTAN and LGI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES i.e., SPARTAN STORES and LGI Homes go up and down completely randomly.
Pair Corralation between SPARTAN STORES and LGI Homes
Assuming the 90 days trading horizon SPARTAN STORES is expected to generate 0.83 times more return on investment than LGI Homes. However, SPARTAN STORES is 1.2 times less risky than LGI Homes. It trades about 0.26 of its potential returns per unit of risk. LGI Homes is currently generating about 0.03 per unit of risk. If you would invest 1,699 in SPARTAN STORES on September 13, 2024 and sell it today you would earn a total of 151.00 from holding SPARTAN STORES or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPARTAN STORES vs. LGI Homes
Performance |
| Timeline |
| SPARTAN STORES |
| LGI Homes |
SPARTAN STORES and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPARTAN STORES and LGI Homes
The main advantage of trading using opposite SPARTAN STORES and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN STORES 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.| SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc |
| LGI Homes vs. NURAN WIRELESS INC | LGI Homes vs. Infrastrutture Wireless Italiane | LGI Homes vs. TITAN MACHINERY | LGI Homes vs. Corporate Office Properties |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |