Correlation Between LCI Industries and Sitio Royalties
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Sitio Royalties 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 Sitio Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Sitio Royalties Corp, you can compare the effects of market volatilities on LCI Industries and Sitio Royalties 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 Sitio Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Sitio Royalties.
Diversification Opportunities for LCI Industries and Sitio Royalties
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between LCI and Sitio is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Sitio Royalties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitio Royalties Corp 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 Sitio Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitio Royalties Corp has no effect on the direction of LCI Industries i.e., LCI Industries and Sitio Royalties go up and down completely randomly.
Pair Corralation between LCI Industries and Sitio Royalties
Given the investment horizon of 90 days LCI Industries is expected to generate 1.0 times more return on investment than Sitio Royalties. However, LCI Industries is 1.0 times more volatile than Sitio Royalties Corp. It trades about 0.21 of its potential returns per unit of risk. Sitio Royalties Corp is currently generating about 0.17 per unit of risk. If you would invest 11,024 in LCI Industries on September 1, 2024 and sell it today you would earn a total of 1,057 from holding LCI Industries or generate 9.59% 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. Sitio Royalties Corp
Performance |
| Timeline |
| LCI Industries |
| Sitio Royalties Corp |
LCI Industries and Sitio Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and Sitio Royalties
The main advantage of trading using opposite LCI Industries and Sitio Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Sitio Royalties 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 Sitio Royalties will offset losses from the drop in Sitio Royalties' long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| Sitio Royalties vs. Black Stone Minerals | Sitio Royalties vs. Dorchester Minerals LP | Sitio Royalties vs. MV Oil Trust | Sitio Royalties vs. VOC Energy Trust |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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