Correlation Between LCI Industries and Malibu Boats
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Malibu Boats 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 Malibu Boats into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Malibu Boats, you can compare the effects of market volatilities on LCI Industries and Malibu Boats 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 Malibu Boats. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Malibu Boats.
Diversification Opportunities for LCI Industries and Malibu Boats
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LCI and Malibu is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats 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 Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of LCI Industries i.e., LCI Industries and Malibu Boats go up and down completely randomly.
Pair Corralation between LCI Industries and Malibu Boats
Given the investment horizon of 90 days LCI Industries is expected to generate 0.81 times more return on investment than Malibu Boats. However, LCI Industries is 1.24 times less risky than Malibu Boats. It trades about -0.2 of its potential returns per unit of risk. Malibu Boats is currently generating about -0.45 per unit of risk. If you would invest 11,792 in LCI Industries on February 6, 2024 and sell it today you would lose (1,108) from holding LCI Industries or give up 9.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LCI Industries vs. Malibu Boats
Performance |
| Timeline |
| LCI Industries |
| Malibu Boats |
LCI Industries and Malibu Boats Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and Malibu Boats
The main advantage of trading using opposite LCI Industries and Malibu Boats positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Malibu Boats 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 Malibu Boats will offset losses from the drop in Malibu Boats' long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| Malibu Boats vs. Planet Fitness | Malibu Boats vs. Funko Inc | Malibu Boats vs. Cedar Fair LP | Malibu Boats vs. OneSpaWorld Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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