Correlation Between LCI Industries and Thor Industries
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Thor 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 LCI Industries and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Thor Industries, you can compare the effects of market volatilities on LCI Industries and Thor 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 LCI Industries with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Thor Industries.
Diversification Opportunities for LCI Industries and Thor Industries
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LCI and Thor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of LCI Industries i.e., LCI Industries and Thor Industries go up and down completely randomly.
Pair Corralation between LCI Industries and Thor Industries
Given the investment horizon of 90 days LCI Industries is expected to generate 2.12 times less return on investment than Thor Industries. In addition to that, LCI Industries is 1.06 times more volatile than Thor Industries. It trades about 0.13 of its total potential returns per unit of risk. Thor Industries is currently generating about 0.3 per unit of volatility. If you would invest 9,402 in Thor Industries on November 2, 2024 and sell it today you would earn a total of 1,137 from holding Thor Industries or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LCI Industries vs. Thor Industries
Performance |
| Timeline |
| LCI Industries |
| Thor Industries |
LCI Industries and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and Thor Industries
The main advantage of trading using opposite LCI Industries and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Thor 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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