Correlation Between Stratasys and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Stratasys 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 Stratasys and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stratasys and LGI Homes, you can compare the effects of market volatilities on Stratasys 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 Stratasys with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratasys and LGI Homes.
Diversification Opportunities for Stratasys and LGI Homes
Good diversification
The 3 months correlation between Stratasys and LGI is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Stratasys 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 Stratasys 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 Stratasys i.e., Stratasys and LGI Homes go up and down completely randomly.
Pair Corralation between Stratasys and LGI Homes
Given the investment horizon of 90 days Stratasys is expected to generate 1.3 times more return on investment than LGI Homes. However, Stratasys is 1.3 times more volatile than LGI Homes. It trades about 0.04 of its potential returns per unit of risk. LGI Homes is currently generating about 0.04 per unit of risk. If you would invest 867.00 in Stratasys on September 1, 2024 and sell it today you would earn a total of 95.00 from holding Stratasys or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stratasys vs. LGI Homes
Performance |
| Timeline |
| Stratasys |
| LGI Homes |
Stratasys and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stratasys and LGI Homes
The main advantage of trading using opposite Stratasys and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stratasys 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.| Stratasys vs. Nano Dimension | Stratasys vs. IONQ Inc | Stratasys vs. D Wave Quantum | Stratasys vs. Desktop Metal |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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