Correlation Between Lithia Motors and NORFOLK
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By analyzing existing cross correlation between Lithia Motors and NORFOLK SOUTHN P, you can compare the effects of market volatilities on Lithia Motors and NORFOLK 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 NORFOLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and NORFOLK.
Diversification Opportunities for Lithia Motors and NORFOLK
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lithia and NORFOLK is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and NORFOLK SOUTHN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORFOLK SOUTHN P 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 NORFOLK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORFOLK SOUTHN P has no effect on the direction of Lithia Motors i.e., Lithia Motors and NORFOLK go up and down completely randomly.
Pair Corralation between Lithia Motors and NORFOLK
Considering the 90-day investment horizon Lithia Motors is expected to under-perform the NORFOLK. In addition to that, Lithia Motors is 1.3 times more volatile than NORFOLK SOUTHN P. It trades about -0.17 of its total potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.17 per unit of volatility. If you would invest 10,351 in NORFOLK SOUTHN P on October 11, 2024 and sell it today you would lose (426.00) from holding NORFOLK SOUTHN P or give up 4.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 57.5% |
Values | Daily Returns |
Lithia Motors vs. NORFOLK SOUTHN P
Performance |
Timeline |
Lithia Motors |
NORFOLK SOUTHN P |
Lithia Motors and NORFOLK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lithia Motors and NORFOLK
The main advantage of trading using opposite Lithia Motors and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, NORFOLK 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 NORFOLK will offset losses from the drop in NORFOLK's long position.Lithia Motors vs. Sonic Automotive | Lithia Motors vs. AutoNation | Lithia Motors vs. Asbury Automotive Group | Lithia Motors vs. Penske Automotive Group |
NORFOLK vs. Philip Morris International | NORFOLK vs. Asbury Automotive Group | NORFOLK vs. Westrock Coffee | NORFOLK vs. Lithia Motors |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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