Correlation Between La Z and LCI Industries

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

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

Diversification Opportunities for La Z and LCI Industries

-0.48

Correlation Coefficient

La Z  LCI Industries

Very good diversification

The 3 months correlation between LZB and LCI is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding La Z Boy Incorporated and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries and La Z 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 La Z Boy Incorporated 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 La Z i.e., La Z and LCI Industries go up and down completely randomly.

Pair Corralation between La Z and LCI Industries

Considering the 90-day investment horizon La Z Boy Incorporated is expected to under-perform the LCI Industries. In addition to that, La Z is 1.17 times more volatile than LCI Industries. It trades about -0.09 of its total potential returns per unit of risk. LCI Industries is currently generating about 0.16 per unit of volatility. If you would invest  8,850  in LCI Industries on May 26, 2025 and sell it today you would earn a total of  1,891  from holding LCI Industries or generate 21.37% return on investment over 90 days.

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

La Z Boy Incorporated  vs.  LCI Industries

La Z Boy

Risk-Adjusted Performance

Weakest

Over the last 90 days La Z Boy Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

LCI Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LCI Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, LCI Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with La Z and LCI Industries

The main advantage of trading using opposite La Z and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z 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 La Z Boy Incorporated 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.