Correlation Between LCI Industries and Installed Building
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Installed Building 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 Installed Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Installed Building Products, you can compare the effects of market volatilities on LCI Industries and Installed Building 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 Installed Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Installed Building.
Diversification Opportunities for LCI Industries and Installed Building
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LCI and Installed is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Installed Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Installed Building 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 Installed Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Installed Building has no effect on the direction of LCI Industries i.e., LCI Industries and Installed Building go up and down completely randomly.
Pair Corralation between LCI Industries and Installed Building
Given the investment horizon of 90 days LCI Industries is expected to generate 3.08 times less return on investment than Installed Building. But when comparing it to its historical volatility, LCI Industries is 1.8 times less risky than Installed Building. It trades about 0.14 of its potential returns per unit of risk. Installed Building Products is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 17,041 in Installed Building Products on June 11, 2025 and sell it today you would earn a total of 10,906 from holding Installed Building Products or generate 64.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LCI Industries vs. Installed Building Products
Performance |
| Timeline |
| LCI Industries |
| Installed Building |
LCI Industries and Installed Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LCI Industries and Installed Building
The main advantage of trading using opposite LCI Industries and Installed Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Installed Building 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 Installed Building will offset losses from the drop in Installed Building's long position.| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
| Installed Building vs. Century Communities | Installed Building vs. MI Homes | Installed Building vs. Taylor Morn Home | Installed Building vs. TRI Pointe Homes |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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