Correlation Between LCI Industries and MCBC Holdings
Can any of the company-specific risk be diversified away by investing in both LCI Industries and MCBC Holdings 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 MCBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and MCBC Holdings, you can compare the effects of market volatilities on LCI Industries and MCBC Holdings 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 MCBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and MCBC Holdings.
Diversification Opportunities for LCI Industries and MCBC Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LCI and MCBC is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings 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 MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of LCI Industries i.e., LCI Industries and MCBC Holdings go up and down completely randomly.
Pair Corralation between LCI Industries and MCBC Holdings
Given the investment horizon of 90 days LCI Industries is expected to generate 1.1 times more return on investment than MCBC Holdings. However, LCI Industries is 1.1 times more volatile than MCBC Holdings. It trades about -0.06 of its potential returns per unit of risk. MCBC Holdings is currently generating about -0.15 per unit of risk. If you would invest 11,329 in LCI Industries on October 19, 2024 and sell it today you would lose (601.00) from holding LCI Industries or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LCI Industries vs. MCBC Holdings
Performance |
| Timeline |
| LCI Industries |
| MCBC Holdings |
LCI Industries and MCBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and MCBC Holdings
The main advantage of trading using opposite LCI Industries and MCBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, MCBC Holdings 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 MCBC Holdings will offset losses from the drop in MCBC Holdings' long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| MCBC Holdings vs. Malibu Boats | MCBC Holdings vs. Onewater Marine | MCBC Holdings vs. Heidrick Struggles International | MCBC Holdings vs. Johnson Outdoors |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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