Correlation Between LCI Industries and Adient PLC
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Adient PLC 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 Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Adient PLC, you can compare the effects of market volatilities on LCI Industries and Adient PLC 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 Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Adient PLC.
Diversification Opportunities for LCI Industries and Adient PLC
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LCI and Adient is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC 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 Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of LCI Industries i.e., LCI Industries and Adient PLC go up and down completely randomly.
Pair Corralation between LCI Industries and Adient PLC
Given the investment horizon of 90 days LCI Industries is expected to generate 0.76 times more return on investment than Adient PLC. However, LCI Industries is 1.32 times less risky than Adient PLC. It trades about 0.01 of its potential returns per unit of risk. Adient PLC is currently generating about -0.17 per unit of risk. If you would invest 10,732 in LCI Industries on February 26, 2024 and sell it today you would lose (17.00) from holding LCI Industries or give up 0.16% 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. Adient PLC
Performance |
Timeline |
LCI Industries |
Adient PLC |
LCI Industries and Adient PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LCI Industries and Adient PLC
The main advantage of trading using opposite LCI Industries and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.LCI Industries vs. Hyliion Holdings Corp | LCI Industries vs. Aeva Technologies | LCI Industries vs. Aeye Inc | LCI Industries vs. Westport Fuel Systems |
Adient PLC vs. Hyliion Holdings Corp | Adient PLC vs. Aeva Technologies | Adient PLC vs. Aeye Inc | Adient PLC vs. Westport Fuel Systems |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Global Correlations Find global opportunities by holding instruments from different markets | |
CEOs Directory Screen CEOs from public companies around the world |