Correlation Between Malibu Boats and LCI Industries
Can any of the company-specific risk be diversified away by investing in both Malibu Boats and LCI 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 Malibu Boats and LCI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malibu Boats and LCI Industries, you can compare the effects of market volatilities on Malibu Boats and LCI 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 Malibu Boats with a short position of LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malibu Boats and LCI Industries.
Diversification Opportunities for Malibu Boats and LCI Industries
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Malibu and LCI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and Malibu Boats 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 Malibu Boats are associated (or correlated) with LCI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCI Industries has no effect on the direction of Malibu Boats i.e., Malibu Boats and LCI Industries go up and down completely randomly.
Pair Corralation between Malibu Boats and LCI Industries
Given the investment horizon of 90 days Malibu Boats is expected to generate 1.19 times more return on investment than LCI Industries. However, Malibu Boats is 1.19 times more volatile than LCI Industries. It trades about 0.01 of its potential returns per unit of risk. LCI Industries is currently generating about 0.01 per unit of risk. If you would invest 4,364 in Malibu Boats on August 27, 2024 and sell it today you would lose (49.00) from holding Malibu Boats or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malibu Boats vs. LCI Industries
Performance |
| Timeline |
| Malibu Boats |
| LCI Industries |
Malibu Boats and LCI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malibu Boats and LCI Industries
The main advantage of trading using opposite Malibu Boats and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malibu Boats position performs unexpectedly, LCI 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 LCI Industries will offset losses from the drop in LCI Industries' long position.| Malibu Boats vs. MCBC Holdings | Malibu Boats vs. Winnebago Industries | Malibu Boats vs. LCI Industries | Malibu Boats vs. Thor Industries |
| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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