Correlation Between GM and Lithia
Specify exactly 2 symbols:
By analyzing existing cross correlation between General Motors and Lithia Motors 4625, you can compare the effects of market volatilities on GM and Lithia 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 GM with a short position of Lithia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lithia.
Diversification Opportunities for GM and Lithia
Very good diversification
The 3 months correlation between GM and Lithia is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lithia Motors 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithia Motors 4625 and GM 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 General Motors are associated (or correlated) with Lithia. 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 4625 has no effect on the direction of GM i.e., GM and Lithia go up and down completely randomly.
Pair Corralation between GM and Lithia
Allowing for the 90-day total investment horizon General Motors is expected to generate 6.16 times more return on investment than Lithia. However, GM is 6.16 times more volatile than Lithia Motors 4625. It trades about 0.11 of its potential returns per unit of risk. Lithia Motors 4625 is currently generating about 0.07 per unit of risk. If you would invest 3,348 in General Motors on September 3, 2024 and sell it today you would earn a total of 2,156 from holding General Motors or generate 64.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.33% |
| Values | Daily Returns |
General Motors vs. Lithia Motors 4625
Performance |
| Timeline |
| General Motors |
| Lithia Motors 4625 |
GM and Lithia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lithia
The main advantage of trading using opposite GM and Lithia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lithia 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 will offset losses from the drop in Lithia's long position.The idea behind General Motors and Lithia Motors 4625 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lithia vs. Western Acquisition Ventures | Lithia vs. Barrick Gold Corp | Lithia vs. Universal | Lithia vs. Inflection Point Acquisition |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |