Correlation Between PACIFIC and LGI Homes
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By analyzing existing cross correlation between PACIFIC GAS AND and LGI Homes, you can compare the effects of market volatilities on PACIFIC 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 PACIFIC with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACIFIC and LGI Homes.
Diversification Opportunities for PACIFIC and LGI Homes
Very poor diversification
The 3 months correlation between PACIFIC and LGI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS AND and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and PACIFIC 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 PACIFIC GAS AND 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 PACIFIC i.e., PACIFIC and LGI Homes go up and down completely randomly.
Pair Corralation between PACIFIC and LGI Homes
Assuming the 90 days trading horizon PACIFIC GAS AND is expected to generate 0.18 times more return on investment than LGI Homes. However, PACIFIC GAS AND is 5.55 times less risky than LGI Homes. It trades about -0.19 of its potential returns per unit of risk. LGI Homes is currently generating about -0.14 per unit of risk. If you would invest 9,525 in PACIFIC GAS AND on September 25, 2024 and sell it today you would lose (437.00) from holding PACIFIC GAS AND or give up 4.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.41% |
Values | Daily Returns |
PACIFIC GAS AND vs. LGI Homes
Performance |
Timeline |
PACIFIC GAS AND |
LGI Homes |
PACIFIC and LGI Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PACIFIC and LGI Homes
The main advantage of trading using opposite PACIFIC and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACIFIC 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.PACIFIC vs. LGI Homes | PACIFIC vs. Cedar Realty Trust | PACIFIC vs. SunLink Health Systems | PACIFIC vs. Bassett Furniture Industries |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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