Correlation Between Solo Brands and LCI Industries
Can any of the company-specific risk be diversified away by investing in both Solo Brands 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 Solo Brands and LCI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and LCI Industries, you can compare the effects of market volatilities on Solo Brands 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 Solo Brands with a short position of LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and LCI Industries.
Diversification Opportunities for Solo Brands and LCI Industries
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Solo and LCI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and Solo Brands 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 Solo Brands 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 Solo Brands i.e., Solo Brands and LCI Industries go up and down completely randomly.
Pair Corralation between Solo Brands and LCI Industries
Considering the 90-day investment horizon Solo Brands is expected to generate 2.29 times less return on investment than LCI Industries. In addition to that, Solo Brands is 2.53 times more volatile than LCI Industries. It trades about 0.03 of its total potential returns per unit of risk. LCI Industries is currently generating about 0.19 per unit of volatility. If you would invest 11,152 in LCI Industries on September 2, 2024 and sell it today you would earn a total of 929.00 from holding LCI Industries or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solo Brands vs. LCI Industries
Performance |
| Timeline |
| Solo Brands |
| LCI Industries |
Solo Brands and LCI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and LCI Industries
The main advantage of trading using opposite Solo Brands and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands 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.| Solo Brands vs. LCI Industries | Solo Brands vs. MCBC Holdings | Solo Brands vs. Winnebago Industries | Solo Brands vs. Thor 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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