Correlation Between MICROSOFT and LGI Homes
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By analyzing existing cross correlation between MICROSOFT PORATION and LGI Homes, you can compare the effects of market volatilities on MICROSOFT 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 MICROSOFT with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of MICROSOFT and LGI Homes.
Diversification Opportunities for MICROSOFT and LGI Homes
Very weak diversification
The 3 months correlation between MICROSOFT and LGI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MICROSOFT PORATION and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and MICROSOFT 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 MICROSOFT PORATION 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 MICROSOFT i.e., MICROSOFT and LGI Homes go up and down completely randomly.
Pair Corralation between MICROSOFT and LGI Homes
Assuming the 90 days trading horizon MICROSOFT PORATION is expected to generate 0.48 times more return on investment than LGI Homes. However, MICROSOFT PORATION is 2.07 times less risky than LGI Homes. It trades about 0.23 of its potential returns per unit of risk. LGI Homes is currently generating about -0.02 per unit of risk. If you would invest 6,011 in MICROSOFT PORATION on September 14, 2024 and sell it today you would earn a total of 319.00 from holding MICROSOFT PORATION or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MICROSOFT PORATION vs. LGI Homes
Performance |
| Timeline |
| MICROSOFT PORATION |
| LGI Homes |
MICROSOFT and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MICROSOFT and LGI Homes
The main advantage of trading using opposite MICROSOFT and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MICROSOFT 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.| MICROSOFT vs. Lipocine | MICROSOFT vs. Radcom | MICROSOFT vs. SunLink Health Systems | MICROSOFT vs. RadNet Inc |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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