Correlation Between LCI Industries and Curtiss Motorcycles
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Curtiss Motorcycles 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 Curtiss Motorcycles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Curtiss Motorcycles, you can compare the effects of market volatilities on LCI Industries and Curtiss Motorcycles 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 Curtiss Motorcycles. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Curtiss Motorcycles.
Diversification Opportunities for LCI Industries and Curtiss Motorcycles
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between LCI and Curtiss is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Curtiss Motorcycles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Motorcycles 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 Curtiss Motorcycles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Motorcycles has no effect on the direction of LCI Industries i.e., LCI Industries and Curtiss Motorcycles go up and down completely randomly.
Pair Corralation between LCI Industries and Curtiss Motorcycles
Given the investment horizon of 90 days LCI Industries is expected to generate 0.14 times more return on investment than Curtiss Motorcycles. However, LCI Industries is 7.28 times less risky than Curtiss Motorcycles. It trades about 0.2 of its potential returns per unit of risk. Curtiss Motorcycles is currently generating about -0.07 per unit of risk. If you would invest 11,628 in LCI Industries on August 28, 2024 and sell it today you would earn a total of 1,042 from holding LCI Industries or generate 8.96% 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. Curtiss Motorcycles
Performance |
| Timeline |
| LCI Industries |
| Curtiss Motorcycles |
LCI Industries and Curtiss Motorcycles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and Curtiss Motorcycles
The main advantage of trading using opposite LCI Industries and Curtiss Motorcycles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Curtiss Motorcycles 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 Curtiss Motorcycles will offset losses from the drop in Curtiss Motorcycles' long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| Curtiss Motorcycles vs. Life Electric Vehicles | Curtiss Motorcycles vs. Evil Empire Designs | Curtiss Motorcycles vs. Twin Vee Powercats | Curtiss Motorcycles vs. LCI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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