Correlation Between LCI Industries and BRP
Can any of the company-specific risk be diversified away by investing in both LCI Industries and BRP 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 BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and BRP Inc, you can compare the effects of market volatilities on LCI Industries and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and BRP.
Diversification Opportunities for LCI Industries and BRP
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between LCI and BRP is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of LCI Industries i.e., LCI Industries and BRP go up and down completely randomly.
Pair Corralation between LCI Industries and BRP
Assuming the 90 days horizon LCI Industries is expected to generate 12.47 times less return on investment than BRP. In addition to that, LCI Industries is 1.0 times more volatile than BRP Inc. It trades about 0.01 of its total potential returns per unit of risk. BRP Inc is currently generating about 0.13 per unit of volatility. If you would invest 4,759 in BRP Inc on October 19, 2024 and sell it today you would earn a total of 221.00 from holding BRP Inc or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LCI Industries vs. BRP Inc
Performance |
| Timeline |
| LCI Industries |
| BRP Inc |
LCI Industries and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and BRP
The main advantage of trading using opposite LCI Industries and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| LCI Industries vs. SYSTEMAIR AB | LCI Industries vs. Delta Air Lines | LCI Industries vs. FAIR ISAAC | LCI Industries vs. Air New Zealand |
| BRP vs. MCEWEN MINING INC | BRP vs. Sterling Construction | BRP vs. De Grey Mining | BRP vs. Hitachi Construction Machinery |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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