Correlation Between LCI Industries and ENN Energy
Can any of the company-specific risk be diversified away by investing in both LCI Industries and ENN Energy 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 ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and ENN Energy Holdings, you can compare the effects of market volatilities on LCI Industries and ENN Energy 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 ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and ENN Energy.
Diversification Opportunities for LCI Industries and ENN Energy
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between LCI and ENN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of LCI Industries i.e., LCI Industries and ENN Energy go up and down completely randomly.
Pair Corralation between LCI Industries and ENN Energy
Given the investment horizon of 90 days LCI Industries is expected to generate 1.86 times less return on investment than ENN Energy. But when comparing it to its historical volatility, LCI Industries is 1.98 times less risky than ENN Energy. It trades about 0.02 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 706.00 in ENN Energy Holdings on September 3, 2024 and sell it today you would lose (34.00) from holding ENN Energy Holdings or give up 4.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.0% |
| Values | Daily Returns |
LCI Industries vs. ENN Energy Holdings
Performance |
| Timeline |
| LCI Industries |
| ENN Energy Holdings |
LCI Industries and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and ENN Energy
The main advantage of trading using opposite LCI Industries and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| ENN Energy vs. Beijing Gas Blue | ENN Energy vs. EverGen Infrastructure Corp | ENN Energy vs. OPAL Fuels | ENN Energy vs. APA Group |
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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