Correlation Between LCI Industries and Sturm Ruger
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Sturm Ruger 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 Sturm Ruger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Sturm Ruger, you can compare the effects of market volatilities on LCI Industries and Sturm Ruger 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 Sturm Ruger. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Sturm Ruger.
Diversification Opportunities for LCI Industries and Sturm Ruger
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between LCI and Sturm is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Sturm Ruger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturm Ruger 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 Sturm Ruger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturm Ruger has no effect on the direction of LCI Industries i.e., LCI Industries and Sturm Ruger go up and down completely randomly.
Pair Corralation between LCI Industries and Sturm Ruger
Given the investment horizon of 90 days LCI Industries is expected to generate 1.33 times more return on investment than Sturm Ruger. However, LCI Industries is 1.33 times more volatile than Sturm Ruger. It trades about 0.11 of its potential returns per unit of risk. Sturm Ruger is currently generating about -0.19 per unit of risk. If you would invest 11,624 in LCI Industries on August 30, 2024 and sell it today you would earn a total of 626.00 from holding LCI Industries or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LCI Industries vs. Sturm Ruger
Performance |
| Timeline |
| LCI Industries |
| Sturm Ruger |
LCI Industries and Sturm Ruger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and Sturm Ruger
The main advantage of trading using opposite LCI Industries and Sturm Ruger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Sturm Ruger 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 Sturm Ruger will offset losses from the drop in Sturm Ruger's long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| Sturm Ruger vs. Ammo Inc | Sturm Ruger vs. Kratos Defense Security | Sturm Ruger vs. VSE Corporation | Sturm Ruger vs. Ammo Preferred |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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