Correlation Between Luminar Technologies and LCI Industries
Can any of the company-specific risk be diversified away by investing in both Luminar Technologies 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 Luminar Technologies and LCI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luminar Technologies and LCI Industries, you can compare the effects of market volatilities on Luminar Technologies 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 Luminar Technologies with a short position of LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luminar Technologies and LCI Industries.
Diversification Opportunities for Luminar Technologies and LCI Industries
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Luminar and LCI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Luminar Technologies and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and Luminar Technologies 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 Luminar Technologies 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 Luminar Technologies i.e., Luminar Technologies and LCI Industries go up and down completely randomly.
Pair Corralation between Luminar Technologies and LCI Industries
Given the investment horizon of 90 days Luminar Technologies is expected to under-perform the LCI Industries. In addition to that, Luminar Technologies is 2.65 times more volatile than LCI Industries. It trades about -0.22 of its total potential returns per unit of risk. LCI Industries is currently generating about -0.17 per unit of volatility. If you would invest 11,450 in LCI Industries on January 20, 2024 and sell it today you would lose (1,031) from holding LCI Industries or give up 9.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Luminar Technologies vs. LCI Industries
Performance |
Timeline |
Luminar Technologies |
LCI Industries |
Luminar Technologies and LCI Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Luminar Technologies and LCI Industries
The main advantage of trading using opposite Luminar Technologies and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luminar Technologies 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.Luminar Technologies vs. Microvast Holdings | Luminar Technologies vs. EVgo Equity Warrants | Luminar Technologies vs. Xos Inc | Luminar Technologies vs. AEye Inc |
LCI Industries vs. Microvast Holdings | LCI Industries vs. EVgo Equity Warrants | LCI Industries vs. Xos Inc | LCI Industries vs. AEye Inc |
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 Stocks Directory module to find actively traded stocks across global markets.
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