Correlation Between LCI Industries and Twin Vee

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

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

Diversification Opportunities for LCI Industries and Twin Vee

0.1

Correlation Coefficient

LCI Industries  Twin Vee

Average diversification

The 3 months correlation between LCI and Twin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Twin Vee Powercats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twin Vee Powercats 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 Twin Vee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twin Vee Powercats has no effect on the direction of LCI Industries i.e., LCI Industries and Twin Vee go up and down completely randomly.

Pair Corralation between LCI Industries and Twin Vee

Given the investment horizon of 90 days LCI Industries is expected to generate 0.44 times more return on investment than Twin Vee. However, LCI Industries is 2.27 times less risky than Twin Vee. It trades about 0.04 of its potential returns per unit of risk. Twin Vee Powercats is currently generating about -0.03 per unit of risk. If you would invest  8,721  in LCI Industries on September 17, 2024 and sell it today you would earn a total of  2,855  from holding LCI Industries or generate 32.74% return on investment over 90 days.

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

LCI Industries  vs.  Twin Vee Powercats

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 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.

Twin Vee Powercats

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twin Vee Powercats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LCI Industries and Twin Vee

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

The idea behind LCI Industries and Twin Vee Powercats 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.