Correlation Between Cannae Holdings and POWR Lithium
Can any of the company-specific risk be diversified away by investing in both Cannae Holdings and POWR Lithium 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 Cannae Holdings and POWR Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannae Holdings and POWR Lithium Corp, you can compare the effects of market volatilities on Cannae Holdings and POWR Lithium 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 Cannae Holdings with a short position of POWR Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannae Holdings and POWR Lithium.
Diversification Opportunities for Cannae Holdings and POWR Lithium
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cannae and POWR is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and POWR Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWR Lithium Corp and Cannae Holdings 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 Cannae Holdings are associated (or correlated) with POWR Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWR Lithium Corp has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and POWR Lithium go up and down completely randomly.
Pair Corralation between Cannae Holdings and POWR Lithium
Given the investment horizon of 90 days Cannae Holdings is expected to under-perform the POWR Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Cannae Holdings is 8.03 times less risky than POWR Lithium. The stock trades about -0.28 of its potential returns per unit of risk. The POWR Lithium Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4.60 in POWR Lithium Corp on October 10, 2024 and sell it today you would lose (0.52) from holding POWR Lithium Corp or give up 11.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Cannae Holdings vs. POWR Lithium Corp
Performance |
Timeline |
Cannae Holdings |
POWR Lithium Corp |
Cannae Holdings and POWR Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cannae Holdings and POWR Lithium
The main advantage of trading using opposite Cannae Holdings and POWR Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings position performs unexpectedly, POWR Lithium 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 POWR Lithium will offset losses from the drop in POWR Lithium's long position.Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. Hamilton Lane | Cannae Holdings vs. ConnectOne Bancorp |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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