Correlation Between 70137WAL2 and LGI Homes
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By analyzing existing cross correlation between US70137WAL28 and LGI Homes, you can compare the effects of market volatilities on 70137WAL2 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 70137WAL2 with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of 70137WAL2 and LGI Homes.
Diversification Opportunities for 70137WAL2 and LGI Homes
Poor diversification
The 3 months correlation between 70137WAL2 and LGI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding US70137WAL28 and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and 70137WAL2 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 US70137WAL28 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 70137WAL2 i.e., 70137WAL2 and LGI Homes go up and down completely randomly.
Pair Corralation between 70137WAL2 and LGI Homes
Assuming the 90 days trading horizon US70137WAL28 is expected to generate 0.18 times more return on investment than LGI Homes. However, US70137WAL28 is 5.67 times less risky than LGI Homes. It trades about -0.08 of its potential returns per unit of risk. LGI Homes is currently generating about -0.12 per unit of risk. If you would invest 9,415 in US70137WAL28 on October 24, 2024 and sell it today you would lose (247.00) from holding US70137WAL28 or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.3% |
| Values | Daily Returns |
US70137WAL28 vs. LGI Homes
Performance |
| Timeline |
| US70137WAL28 |
| LGI Homes |
70137WAL2 and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 70137WAL2 and LGI Homes
The main advantage of trading using opposite 70137WAL2 and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 70137WAL2 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.| 70137WAL2 vs. LGI Homes | 70137WAL2 vs. flyExclusive, | 70137WAL2 vs. Vornado Realty Trust | 70137WAL2 vs. Kilroy Realty Corp |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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