Correlation Between LGI Homes and NCR Voyix

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

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

Diversification Opportunities for LGI Homes and NCR Voyix

0.11

Correlation Coefficient

LGI Homes  NCR Voyix

Average diversification

The 3 months correlation between LGI and NCR is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and NCR Voyix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCR Voyix 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 NCR Voyix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCR Voyix has no effect on the direction of LGI Homes i.e., LGI Homes and NCR Voyix go up and down completely randomly.

Pair Corralation between LGI Homes and NCR Voyix

Given the investment horizon of 90 days LGI Homes is expected to generate 1.06 times more return on investment than NCR Voyix. However, LGI Homes is 1.06 times more volatile than NCR Voyix. It trades about 0.07 of its potential returns per unit of risk. NCR Voyix is currently generating about -0.15 per unit of risk. If you would invest  9,043  in LGI Homes on October 22, 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	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LGI Homes  vs.  NCR Voyix

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.

NCR Voyix

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NCR Voyix are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, NCR Voyix is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LGI Homes and NCR Voyix

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

The idea behind LGI Homes and NCR Voyix 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.