Correlation Between EZGO Technologies and LCI Industries

Can any of the company-specific risk be diversified away by investing in both EZGO 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 EZGO 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 EZGO Technologies and LCI Industries, you can compare the effects of market volatilities on EZGO 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 EZGO Technologies with a short position of LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of EZGO Technologies and LCI Industries.

Diversification Opportunities for EZGO Technologies and LCI Industries

0.44

Correlation Coefficient

EZGO Technologies  LCI Industries

Very weak diversification

The 3 months correlation between EZGO and LCI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and EZGO 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 EZGO 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 EZGO Technologies i.e., EZGO Technologies and LCI Industries go up and down completely randomly.

Pair Corralation between EZGO Technologies and LCI Industries

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the LCI Industries. In addition to that, EZGO Technologies is 2.5 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 -0.09 per unit of volatility. If you would invest  10,151  in LCI Industries on December 27, 2024 and sell it today you would lose (1,167) from holding LCI Industries or give up 11.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EZGO Technologies  vs.  LCI Industries

EZGO Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

LCI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days LCI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with EZGO Technologies and LCI Industries

The main advantage of trading using opposite EZGO Technologies and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZGO 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.

The idea behind EZGO Technologies and LCI Industries 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.