Correlation Between Meiwu Technology and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Meiwu Technology 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 Meiwu Technology and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meiwu Technology Co and LGI Homes, you can compare the effects of market volatilities on Meiwu Technology 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 Meiwu Technology with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiwu Technology and LGI Homes.
Diversification Opportunities for Meiwu Technology and LGI Homes
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Meiwu and LGI is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Meiwu Technology Co and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Meiwu Technology 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 Meiwu Technology Co 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 Meiwu Technology i.e., Meiwu Technology and LGI Homes go up and down completely randomly.
Pair Corralation between Meiwu Technology and LGI Homes
Considering the 90-day investment horizon Meiwu Technology Co is expected to generate 1.42 times more return on investment than LGI Homes. However, Meiwu Technology is 1.42 times more volatile than LGI Homes. It trades about 0.23 of its potential returns per unit of risk. LGI Homes is currently generating about 0.11 per unit of risk. If you would invest 81.00 in Meiwu Technology Co on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Meiwu Technology Co or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiwu Technology Co vs. LGI Homes
Performance |
| Timeline |
| Meiwu Technology |
| LGI Homes |
Meiwu Technology and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiwu Technology and LGI Homes
The main advantage of trading using opposite Meiwu Technology and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiwu Technology 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.| Meiwu Technology vs. MOGU Inc | Meiwu Technology vs. iPower Inc | Meiwu Technology vs. Jeffs Brands | Meiwu Technology vs. Kidpik 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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