Correlation Between LCI Industries and Fox Factory

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Fox Factory 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 Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Fox Factory Holding, you can compare the effects of market volatilities on LCI Industries and Fox Factory 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 Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Fox Factory.

Diversification Opportunities for LCI Industries and Fox Factory

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between LCI and Fox is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding 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 Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of LCI Industries i.e., LCI Industries and Fox Factory go up and down completely randomly.

Pair Corralation between LCI Industries and Fox Factory

Given the investment horizon of 90 days LCI Industries is expected to generate 0.61 times more return on investment than Fox Factory. However, LCI Industries is 1.65 times less risky than Fox Factory. It trades about 0.03 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.11 per unit of risk. If you would invest  11,540  in LCI Industries on December 29, 2023 and sell it today you would earn a total of  514.00  from holding LCI Industries or generate 4.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

LCI Industries  vs.  Fox Factory Holding

 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.
Fox Factory Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Fox Factory Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

LCI Industries and Fox Factory Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LCI Industries and Fox Factory

The main advantage of trading using opposite LCI Industries and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory's long position.
The idea behind LCI Industries and Fox Factory Holding 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Transaction History
View history of all your transactions and understand their impact on performance
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories