Correlation Between FATFISH GROUP and LGI Homes
Can any of the company-specific risk be diversified away by investing in both FATFISH GROUP 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 FATFISH GROUP and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FATFISH GROUP LTD and LGI Homes, you can compare the effects of market volatilities on FATFISH GROUP 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 FATFISH GROUP with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of FATFISH GROUP and LGI Homes.
Diversification Opportunities for FATFISH GROUP and LGI Homes
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FATFISH and LGI is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding FATFISH GROUP LTD and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and FATFISH GROUP 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 FATFISH GROUP LTD 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 FATFISH GROUP i.e., FATFISH GROUP and LGI Homes go up and down completely randomly.
Pair Corralation between FATFISH GROUP and LGI Homes
Assuming the 90 days horizon FATFISH GROUP LTD is expected to generate 3.41 times more return on investment than LGI Homes. However, FATFISH GROUP is 3.41 times more volatile than LGI Homes. It trades about -0.07 of its potential returns per unit of risk. LGI Homes is currently generating about -0.29 per unit of risk. If you would invest 0.50 in FATFISH GROUP LTD on December 5, 2024 and sell it today you would lose (0.20) from holding FATFISH GROUP LTD or give up 40.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
FATFISH GROUP LTD vs. LGI Homes
Performance |
Timeline |
FATFISH GROUP LTD |
LGI Homes |
FATFISH GROUP and LGI Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FATFISH GROUP and LGI Homes
The main advantage of trading using opposite FATFISH GROUP and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FATFISH GROUP 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.FATFISH GROUP vs. SCANSOURCE | FATFISH GROUP vs. Tsingtao Brewery | FATFISH GROUP vs. BJs Restaurants | FATFISH GROUP vs. Monster Beverage Corp |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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