Correlation Between Winnebago Industries and Life Electric
Can any of the company-specific risk be diversified away by investing in both Winnebago Industries and Life Electric 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 Winnebago Industries and Life Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winnebago Industries and Life Electric Vehicles, you can compare the effects of market volatilities on Winnebago Industries and Life Electric 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 Winnebago Industries with a short position of Life Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winnebago Industries and Life Electric.
Diversification Opportunities for Winnebago Industries and Life Electric
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Winnebago and Life is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Winnebago Industries and Life Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Electric Vehicles and Winnebago 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 Winnebago Industries are associated (or correlated) with Life Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Electric Vehicles has no effect on the direction of Winnebago Industries i.e., Winnebago Industries and Life Electric go up and down completely randomly.
Pair Corralation between Winnebago Industries and Life Electric
Considering the 90-day investment horizon Winnebago Industries is expected to generate 75.23 times less return on investment than Life Electric. But when comparing it to its historical volatility, Winnebago Industries is 5.08 times less risky than Life Electric. It trades about 0.0 of its potential returns per unit of risk. Life Electric Vehicles is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Life Electric Vehicles on August 31, 2024 and sell it today you would lose (29.00) from holding Life Electric Vehicles or give up 53.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Winnebago Industries vs. Life Electric Vehicles
Performance |
| Timeline |
| Winnebago Industries |
| Life Electric Vehicles |
Winnebago Industries and Life Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winnebago Industries and Life Electric
The main advantage of trading using opposite Winnebago Industries and Life Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winnebago Industries position performs unexpectedly, Life Electric 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 Life Electric will offset losses from the drop in Life Electric's long position.| Winnebago Industries vs. LCI Industries | Winnebago Industries vs. Brunswick | Winnebago Industries vs. Polaris Industries | Winnebago Industries vs. Marine Products |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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