Correlation Between LCI Industries and Fox Factory
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Fox Factory 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 Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Fox Factory Holding, you can compare the effects of market volatilities on LCI Industries and Fox Factory 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 Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Fox Factory.
Diversification Opportunities for LCI Industries and Fox Factory
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LCI and Fox is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding 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 Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of LCI Industries i.e., LCI Industries and Fox Factory go up and down completely randomly.
Pair Corralation between LCI Industries and Fox Factory
Assuming the 90 days horizon LCI Industries is expected to generate 1.3 times more return on investment than Fox Factory. However, LCI Industries is 1.3 times more volatile than Fox Factory Holding. It trades about 0.01 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.15 per unit of risk. If you would invest 10,400 in LCI Industries on October 19, 2024 and sell it today you would earn a total of 0.00 from holding LCI Industries or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
LCI Industries vs. Fox Factory Holding
Performance |
| Timeline |
| LCI Industries |
| Fox Factory Holding |
LCI Industries and Fox Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and Fox Factory
The main advantage of trading using opposite LCI Industries and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory'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 |
| Fox Factory vs. Harley Davidson | Fox Factory vs. Harley Davidson | Fox Factory vs. BRP Inc | Fox Factory vs. Thor Industries |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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