Correlation Between Lithia Motors and BSANCI

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

By analyzing existing cross correlation between Lithia Motors and BSANCI 3177 26 OCT 31, you can compare the effects of market volatilities on Lithia Motors and BSANCI 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 Lithia Motors with a short position of BSANCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and BSANCI.

Diversification Opportunities for Lithia Motors and BSANCI

-0.65

Correlation Coefficient

Lithia Motors  BSANCI

Excellent diversification

The 3 months correlation between Lithia and BSANCI is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and BSANCI 3177 26 OCT 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSANCI 3177 26 and Lithia Motors 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 Lithia Motors are associated (or correlated) with BSANCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSANCI 3177 26 has no effect on the direction of Lithia Motors i.e., Lithia Motors and BSANCI go up and down completely randomly.

Pair Corralation between Lithia Motors and BSANCI

Considering the 90-day investment horizon Lithia Motors is expected to under-perform the BSANCI. In addition to that, Lithia Motors is 3.46 times more volatile than BSANCI 3177 26 OCT 31. It trades about -0.12 of its total potential returns per unit of risk. BSANCI 3177 26 OCT 31 is currently generating about 0.03 per unit of volatility. If you would invest  8,781  in BSANCI 3177 26 OCT 31 on December 22, 2024 and sell it today you would earn a total of  41.00  from holding BSANCI 3177 26 OCT 31 or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	47.54%
Values	Daily Returns

Lithia Motors  vs.  BSANCI 3177 26 OCT 31

Lithia Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lithia Motors 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BSANCI 3177 26

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BSANCI 3177 26 OCT 31 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BSANCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lithia Motors and BSANCI

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

The idea behind Lithia Motors and BSANCI 3177 26 OCT 31 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.