Correlation Between LGI Homes and AirNet Technology

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Can any of the company-specific risk be diversified away by investing in both LGI Homes and AirNet Technology 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 AirNet Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and AirNet Technology, you can compare the effects of market volatilities on LGI Homes and AirNet Technology 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 AirNet Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and AirNet Technology.

Diversification Opportunities for LGI Homes and AirNet Technology

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between LGI Homes and AirNet Technology

If you would invest  11,087  in LGI Homes on December 30, 2023 and sell it today you would earn a total of  550.00  from holding LGI Homes or generate 4.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

LGI Homes  vs.  AirNet Technology

 Performance 
       Timeline  
LGI Homes 

Risk-Adjusted Performance

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Over the last 90 days LGI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.
AirNet Technology 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days AirNet Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, AirNet Technology is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

LGI Homes and AirNet Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LGI Homes and AirNet Technology

The main advantage of trading using opposite LGI Homes and AirNet Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes position performs unexpectedly, AirNet Technology 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 AirNet Technology will offset losses from the drop in AirNet Technology's long position.
The idea behind LGI Homes and AirNet Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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