Correlation Between LCI Industries and SYSTEMAIR
Can any of the company-specific risk be diversified away by investing in both LCI Industries and SYSTEMAIR 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 LCI Industries and SYSTEMAIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and SYSTEMAIR AB, you can compare the effects of market volatilities on LCI Industries and SYSTEMAIR 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 LCI Industries with a short position of SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and SYSTEMAIR.
Diversification Opportunities for LCI Industries and SYSTEMAIR
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LCI and SYSTEMAIR is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and LCI Industries 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 LCI Industries are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of LCI Industries i.e., LCI Industries and SYSTEMAIR go up and down completely randomly.
Pair Corralation between LCI Industries and SYSTEMAIR
Assuming the 90 days horizon LCI Industries is expected to generate 0.92 times more return on investment than SYSTEMAIR. However, LCI Industries is 1.09 times less risky than SYSTEMAIR. It trades about 0.12 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about -0.1 per unit of risk. If you would invest 9,700 in LCI Industries on October 31, 2024 and sell it today you would earn a total of 500.00 from holding LCI Industries or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LCI Industries vs. SYSTEMAIR AB
Performance |
| Timeline |
| LCI Industries |
| SYSTEMAIR AB |
LCI Industries and SYSTEMAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and SYSTEMAIR
The main advantage of trading using opposite LCI Industries and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, SYSTEMAIR 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 SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.| LCI Industries vs. Harley Davidson | LCI Industries vs. Fox Factory Holding | LCI Industries vs. Thor Industries | LCI Industries vs. Patrick Industries |
| SYSTEMAIR vs. Altair Engineering | SYSTEMAIR vs. Elmos Semiconductor SE | SYSTEMAIR vs. Clean Energy Fuels | SYSTEMAIR vs. Semiconductor Manufacturing International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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