Correlation Between LCI Industries and EZGO Technologies

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

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

Diversification Opportunities for LCI Industries and EZGO Technologies

-0.17

Correlation Coefficient

LCI Industries  EZGO Technologies

Good diversification

The 3 months correlation between LCI and EZGO is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and EZGO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZGO Technologies 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 EZGO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZGO Technologies has no effect on the direction of LCI Industries i.e., LCI Industries and EZGO Technologies go up and down completely randomly.

Pair Corralation between LCI Industries and EZGO Technologies

Given the investment horizon of 90 days LCI Industries is expected to generate 0.37 times more return on investment than EZGO Technologies. However, LCI Industries is 2.7 times less risky than EZGO Technologies. It trades about 0.04 of its potential returns per unit of risk. EZGO Technologies is currently generating about -0.09 per unit of risk. If you would invest  11,784  in LCI Industries on August 30, 2024 and sell it today you would earn a total of  466.00  from holding LCI Industries or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

LCI Industries  vs.  EZGO Technologies

LCI Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LCI Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, LCI Industries is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

EZGO Technologies

Risk-Adjusted Performance

0 of 100

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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with LCI Industries and EZGO Technologies

The main advantage of trading using opposite LCI Industries and EZGO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, EZGO Technologies 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 EZGO Technologies will offset losses from the drop in EZGO Technologies' long position.

The idea behind LCI Industries and EZGO Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.