Correlation Between LCI Industries and Camping World

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Can any of the company-specific risk be diversified away by investing in both LCI Industries and Camping World 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 Camping World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Camping World Holdings, you can compare the effects of market volatilities on LCI Industries and Camping World 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 Camping World. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Camping World.

Diversification Opportunities for LCI Industries and Camping World

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between LCI and Camping is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Camping World Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camping World 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 Camping World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camping World Holdings has no effect on the direction of LCI Industries i.e., LCI Industries and Camping World go up and down completely randomly.

Pair Corralation between LCI Industries and Camping World

Given the investment horizon of 90 days LCI Industries is expected to under-perform the Camping World. In addition to that, LCI Industries is 1.07 times more volatile than Camping World Holdings. It trades about -0.04 of its total potential returns per unit of risk. Camping World Holdings is currently generating about 0.04 per unit of volatility. If you would invest  2,644  in Camping World Holdings on December 29, 2023 and sell it today you would earn a total of  47.00  from holding Camping World Holdings or generate 1.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

LCI Industries  vs.  Camping World Holdings

 Performance 
       Timeline  
LCI Industries 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days LCI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, LCI Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
Camping World Holdings 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Camping World Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Camping World is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

LCI Industries and Camping World Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LCI Industries and Camping World

The main advantage of trading using opposite LCI Industries and Camping World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Camping World 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 Camping World will offset losses from the drop in Camping World's long position.
The idea behind LCI Industries and Camping World Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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