Correlation Between LGI Homes and OMNICOM
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By analyzing existing cross correlation between LGI Homes and OMNICOM GROUP INC, you can compare the effects of market volatilities on LGI Homes and OMNICOM 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 OMNICOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and OMNICOM.
Diversification Opportunities for LGI Homes and OMNICOM
Weak diversification
The 3 months correlation between LGI and OMNICOM is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and OMNICOM GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMNICOM GROUP 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 OMNICOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMNICOM GROUP INC has no effect on the direction of LGI Homes i.e., LGI Homes and OMNICOM go up and down completely randomly.
Pair Corralation between LGI Homes and OMNICOM
Given the investment horizon of 90 days LGI Homes is expected to under-perform the OMNICOM. In addition to that, LGI Homes is 2.81 times more volatile than OMNICOM GROUP INC. It trades about -0.36 of its total potential returns per unit of risk. OMNICOM GROUP INC is currently generating about -0.21 per unit of volatility. If you would invest 9,875 in OMNICOM GROUP INC on December 5, 2024 and sell it today you would lose (356.00) from holding OMNICOM GROUP INC or give up 3.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LGI Homes vs. OMNICOM GROUP INC
Performance |
Timeline |
LGI Homes |
OMNICOM GROUP INC |
LGI Homes and OMNICOM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LGI Homes and OMNICOM
The main advantage of trading using opposite LGI Homes and OMNICOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, OMNICOM 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 OMNICOM will offset losses from the drop in OMNICOM's long position.LGI Homes vs. MI Homes | LGI Homes vs. Taylor Morn Home | LGI Homes vs. TRI Pointe Homes | LGI Homes vs. Beazer Homes USA |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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