Correlation Between Lithia Motors and GREENX METALS
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and GREENX METALS 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 GREENX METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and GREENX METALS LTD, you can compare the effects of market volatilities on Lithia Motors and GREENX METALS 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 GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and GREENX METALS.
Diversification Opportunities for Lithia Motors and GREENX METALS
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lithia and GREENX is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD 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 GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of Lithia Motors i.e., Lithia Motors and GREENX METALS go up and down completely randomly.
Pair Corralation between Lithia Motors and GREENX METALS
Assuming the 90 days horizon Lithia Motors is expected to generate 0.5 times more return on investment than GREENX METALS. However, Lithia Motors is 2.0 times less risky than GREENX METALS. It trades about 0.06 of its potential returns per unit of risk. GREENX METALS LTD is currently generating about 0.01 per unit of risk. If you would invest 19,371 in Lithia Motors on September 29, 2024 and sell it today you would earn a total of 15,229 from holding Lithia Motors or generate 78.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Lithia Motors vs. GREENX METALS LTD
Performance |
Timeline |
Lithia Motors |
GREENX METALS LTD |
Lithia Motors and GREENX METALS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lithia Motors and GREENX METALS
The main advantage of trading using opposite Lithia Motors and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, GREENX METALS 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 GREENX METALS will offset losses from the drop in GREENX METALS's long position.Lithia Motors vs. Copart Inc | Lithia Motors vs. CarMax Inc | Lithia Motors vs. DIeteren Group SA | Lithia Motors vs. Penske Automotive Group |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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