Correlation Between Artisan Partners and Lithia Motors
Can any of the company-specific risk be diversified away by investing in both Artisan Partners and Lithia Motors 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 Artisan Partners and Lithia Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artisan Partners Asset and Lithia Motors, you can compare the effects of market volatilities on Artisan Partners and Lithia Motors 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 Artisan Partners with a short position of Lithia Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Partners and Lithia Motors.
Diversification Opportunities for Artisan Partners and Lithia Motors
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Artisan and Lithia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and Lithia Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithia Motors and Artisan Partners 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 Artisan Partners Asset are associated (or correlated) with Lithia Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithia Motors has no effect on the direction of Artisan Partners i.e., Artisan Partners and Lithia Motors go up and down completely randomly.
Pair Corralation between Artisan Partners and Lithia Motors
Given the investment horizon of 90 days Artisan Partners is expected to generate 1.65 times less return on investment than Lithia Motors. But when comparing it to its historical volatility, Artisan Partners Asset is 1.28 times less risky than Lithia Motors. It trades about 0.15 of its potential returns per unit of risk. Lithia Motors is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 35,743 in Lithia Motors on November 1, 2024 and sell it today you would earn a total of 2,515 from holding Lithia Motors or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Artisan Partners Asset vs. Lithia Motors
Performance |
| Timeline |
| Artisan Partners Asset |
| Lithia Motors |
Artisan Partners and Lithia Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Artisan Partners and Lithia Motors
The main advantage of trading using opposite Artisan Partners and Lithia Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artisan Partners position performs unexpectedly, Lithia Motors 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 Lithia Motors will offset losses from the drop in Lithia Motors' long position.| Artisan Partners vs. Federated Premier Municipal | Artisan Partners vs. Blackrock Muniyield | Artisan Partners vs. Diamond Hill Investment | Artisan Partners vs. NXG NextGen Infrastructure |
| Lithia Motors vs. Sonic Automotive | Lithia Motors vs. AutoNation | Lithia Motors vs. Asbury Automotive Group | Lithia Motors vs. Penske Automotive Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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