Correlation Between LGI Homes and JJill

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

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

Diversification Opportunities for LGI Homes and JJill

0.0

Correlation Coefficient

LGI Homes  JJill

Pay attention - limited upside

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

Pair Corralation between LGI Homes and JJill

Given the investment horizon of 90 days LGI Homes is expected to generate 7.75 times less return on investment than JJill. But when comparing it to its historical volatility, LGI Homes is 1.05 times less risky than JJill. It trades about 0.0 of its potential returns per unit of risk. JJill Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,325  in JJill Inc on September 12, 2024 and sell it today you would earn a total of  454.00  from holding JJill Inc or generate 19.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LGI Homes  vs.  JJill Inc

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 fairly strong forward indicators, LGI Homes is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

JJill Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LGI Homes and JJill

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

The idea behind LGI Homes and JJill Inc 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.