Correlation Between Sitio Royalties and LCI Industries
Can any of the company-specific risk be diversified away by investing in both Sitio Royalties 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 Sitio Royalties and LCI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitio Royalties Corp and LCI Industries, you can compare the effects of market volatilities on Sitio Royalties 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 Sitio Royalties with a short position of LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitio Royalties and LCI Industries.
Diversification Opportunities for Sitio Royalties and LCI Industries
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sitio and LCI is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sitio Royalties Corp and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and Sitio Royalties 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 Sitio Royalties Corp 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 Sitio Royalties i.e., Sitio Royalties and LCI Industries go up and down completely randomly.
Pair Corralation between Sitio Royalties and LCI Industries
Considering the 90-day investment horizon Sitio Royalties Corp is expected to generate 0.95 times more return on investment than LCI Industries. However, Sitio Royalties Corp is 1.06 times less risky than LCI Industries. It trades about 0.11 of its potential returns per unit of risk. LCI Industries is currently generating about 0.06 per unit of risk. If you would invest 2,097 in Sitio Royalties Corp on September 3, 2024 and sell it today you would earn a total of 273.00 from holding Sitio Royalties Corp or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitio Royalties Corp vs. LCI Industries
Performance |
| Timeline |
| Sitio Royalties Corp |
| LCI Industries |
Sitio Royalties and LCI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitio Royalties and LCI Industries
The main advantage of trading using opposite Sitio Royalties and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitio Royalties 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.| Sitio Royalties vs. Black Stone Minerals | Sitio Royalties vs. Dorchester Minerals LP | Sitio Royalties vs. MV Oil Trust | Sitio Royalties vs. VOC Energy Trust |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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