Correlation Between Commercial Vehicle and Lithia Motors
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and Lithia Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and Lithia Motors, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of Lithia Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Lithia Motors.
Diversification Opportunities for Commercial Vehicle and Lithia Motors
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commercial and Lithia is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Lithia Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithia Motors and Commercial Vehicle 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 Commercial Vehicle Group 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 Commercial Vehicle i.e., Commercial Vehicle and Lithia Motors go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Lithia Motors
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the Lithia Motors. In addition to that, Commercial Vehicle is 1.26 times more volatile than Lithia Motors. It trades about -0.05 of its total potential returns per unit of risk. Lithia Motors is currently generating about 0.06 per unit of volatility. If you would invest 20,355 in Lithia Motors on September 3, 2024 and sell it today you would earn a total of 16,245 from holding Lithia Motors or generate 79.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. Lithia Motors
Performance |
| Timeline |
| Commercial Vehicle |
| Lithia Motors |
Commercial Vehicle and Lithia Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Lithia Motors
The main advantage of trading using opposite Commercial Vehicle and Lithia Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
| Lithia Motors vs. GRUPO CARSO A1 | Lithia Motors vs. Commercial Vehicle Group | Lithia Motors vs. Motorcar Parts of | Lithia Motors vs. Wizz Air Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |