Correlation Between LGI Homes and Decisionpoint Systems

Can any of the company-specific risk be diversified away by investing in both LGI Homes and Decisionpoint Systems 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 LGI Homes and Decisionpoint Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LGI Homes and Decisionpoint Systems, you can compare the effects of market volatilities on LGI Homes and Decisionpoint Systems 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 LGI Homes with a short position of Decisionpoint Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Decisionpoint Systems.

Diversification Opportunities for LGI Homes and Decisionpoint Systems

0.0

Correlation Coefficient

LGI Homes  Decisionpoint Systems

Pay attention - limited upside

The 3 months correlation between LGI and Decisionpoint is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Decisionpoint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decisionpoint Systems and LGI Homes 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 LGI Homes are associated (or correlated) with Decisionpoint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decisionpoint Systems has no effect on the direction of LGI Homes i.e., LGI Homes and Decisionpoint Systems go up and down completely randomly.

Pair Corralation between LGI Homes and Decisionpoint Systems

If you would invest  9,043  in LGI Homes on October 23, 2024 and sell it today you would earn a total of  204.00  from holding LGI Homes or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

LGI Homes  vs.  Decisionpoint Systems

LGI Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LGI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Decisionpoint Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Decisionpoint Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Decisionpoint Systems is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LGI Homes and Decisionpoint Systems

The main advantage of trading using opposite LGI Homes and Decisionpoint Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, Decisionpoint Systems 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 Decisionpoint Systems will offset losses from the drop in Decisionpoint Systems' long position.

The idea behind LGI Homes and Decisionpoint Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.