Correlation Between Brunswick and LCI Industries
Can any of the company-specific risk be diversified away by investing in both Brunswick and LCI Industries 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 Brunswick and LCI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and LCI Industries, you can compare the effects of market volatilities on Brunswick and LCI Industries 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 Brunswick with a short position of LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and LCI Industries.
Diversification Opportunities for Brunswick and LCI Industries
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brunswick and LCI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and Brunswick 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 Brunswick are associated (or correlated) with LCI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCI Industries has no effect on the direction of Brunswick i.e., Brunswick and LCI Industries go up and down completely randomly.
Pair Corralation between Brunswick and LCI Industries
Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the LCI Industries. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 1.14 times less risky than LCI Industries. The stock trades about -0.04 of its potential returns per unit of risk. The LCI Industries is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 11,244 in LCI Industries on November 8, 2024 and sell it today you would lose (984.00) from holding LCI Industries or give up 8.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. LCI Industries
Performance |
| Timeline |
| Brunswick |
| LCI Industries |
Brunswick and LCI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and LCI Industries
The main advantage of trading using opposite Brunswick and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, LCI Industries 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 LCI Industries will offset losses from the drop in LCI Industries' long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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