Correlation Between PulteGroup and SIGA Technologies

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

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

Diversification Opportunities for PulteGroup and SIGA Technologies

0.68

Correlation Coefficient

PulteGroup  SIGA Technologies

Poor diversification

The 3 months correlation between PulteGroup and SIGA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PulteGroup and SIGA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGA Technologies and PulteGroup 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 PulteGroup are associated (or correlated) with SIGA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGA Technologies has no effect on the direction of PulteGroup i.e., PulteGroup and SIGA Technologies go up and down completely randomly.

Pair Corralation between PulteGroup and SIGA Technologies

Considering the 90-day investment horizon PulteGroup is expected to generate 0.42 times more return on investment than SIGA Technologies. However, PulteGroup is 2.4 times less risky than SIGA Technologies. It trades about 0.11 of its potential returns per unit of risk. SIGA Technologies is currently generating about 0.02 per unit of risk. If you would invest  4,153  in PulteGroup on February 10, 2024 and sell it today you would earn a total of  7,615  from holding PulteGroup or generate 183.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

PulteGroup  vs.  SIGA Technologies

PulteGroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PulteGroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, PulteGroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

SIGA Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIGA Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, SIGA Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PulteGroup and SIGA Technologies

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

The idea behind PulteGroup and SIGA Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.