Correlation Between Cannae Holdings and POWR Lithium

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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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Cannae Holdings  vs.  POWR Lithium Corp

 Performance 
       Timeline  
Cannae Holdings 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Cannae Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.
POWR Lithium Corp 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in POWR Lithium Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, POWR Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Cannae Holdings and POWR Lithium Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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