Correlation Between DAX Index and Lithia Motors
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By analyzing existing cross correlation between DAX Index and Lithia Motors, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of Lithia Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Lithia Motors.
Diversification Opportunities for DAX Index and Lithia Motors
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and Lithia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Lithia Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithia Motors and DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and Lithia Motors go up and down completely randomly.
Pair Corralation between DAX Index and Lithia Motors
Assuming the 90 days trading horizon DAX Index is expected to generate 0.45 times more return on investment than Lithia Motors. However, DAX Index is 2.21 times less risky than Lithia Motors. It trades about 0.25 of its potential returns per unit of risk. Lithia Motors is currently generating about 0.09 per unit of risk. If you would invest 1,944,860 in DAX Index on September 12, 2024 and sell it today you would earn a total of 88,056 from holding DAX Index or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Lithia Motors
Performance |
| Timeline |
DAX Index and Lithia Motors Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Lithia Motors
Pair trading matchups for Lithia Motors
Pair Trading with DAX Index and Lithia Motors
The main advantage of trading using opposite DAX Index and Lithia Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. Arrow Electronics | DAX Index vs. CANON MARKETING JP | DAX Index vs. The Trade Desk | DAX Index vs. METHODE ELECTRONICS |
| Lithia Motors vs. Superior Plus Corp | Lithia Motors vs. SIVERS SEMICONDUCTORS AB | Lithia Motors vs. Norsk Hydro ASA | Lithia Motors vs. Reliance Steel Aluminum |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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