Correlation Between Hasbro and LCI Industries

Can any of the company-specific risk be diversified away by investing in both Hasbro 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 Hasbro and LCI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hasbro Inc and LCI Industries, you can compare the effects of market volatilities on Hasbro 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 Hasbro with a short position of LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and LCI Industries.

Diversification Opportunities for Hasbro and LCI Industries

0.71

Correlation Coefficient

Hasbro  LCI Industries

Poor diversification

The 3 months correlation between Hasbro and LCI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and LCI Industries go up and down completely randomly.

Pair Corralation between Hasbro and LCI Industries

Considering the 90-day investment horizon Hasbro Inc is expected to generate 0.86 times more return on investment than LCI Industries. However, Hasbro Inc is 1.17 times less risky than LCI Industries. It trades about 0.02 of its potential returns per unit of risk. LCI Industries is currently generating about 0.01 per unit of risk. If you would invest  5,333  in Hasbro Inc on October 6, 2024 and sell it today you would earn a total of  347.00  from holding Hasbro Inc or generate 6.51% return on investment over 90 days.

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

Hasbro Inc  vs.  LCI Industries

Hasbro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hasbro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

LCI Industries

Risk-Adjusted Performance

0 of 100

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 Hasbro and LCI Industries

The main advantage of trading using opposite Hasbro and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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 Hasbro Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.