Correlation Between Independence Realty and Li Auto
Can any of the company-specific risk be diversified away by investing in both Independence Realty and Li Auto 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 Independence Realty and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independence Realty Trust and Li Auto, you can compare the effects of market volatilities on Independence Realty and Li Auto 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 Independence Realty with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Realty and Li Auto.
Diversification Opportunities for Independence Realty and Li Auto
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Independence and Li Auto is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Independence Realty 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 Independence Realty Trust are associated (or correlated) with Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of Independence Realty i.e., Independence Realty and Li Auto go up and down completely randomly.
Pair Corralation between Independence Realty and Li Auto
Considering the 90-day investment horizon Independence Realty Trust is expected to generate 0.31 times more return on investment than Li Auto. However, Independence Realty Trust is 3.28 times less risky than Li Auto. It trades about 0.21 of its potential returns per unit of risk. Li Auto is currently generating about 0.03 per unit of risk. If you would invest 2,061 in Independence Realty Trust on September 13, 2024 and sell it today you would earn a total of 85.00 from holding Independence Realty Trust or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independence Realty Trust vs. Li Auto
Performance |
| Timeline |
| Independence Realty Trust |
| Li Auto |
Independence Realty and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Realty and Li Auto
The main advantage of trading using opposite Independence Realty and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Realty position performs unexpectedly, Li Auto 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 Li Auto will offset losses from the drop in Li Auto's long position.| Independence Realty vs. Apartment Investment and | Independence Realty vs. Clipper Realty | Independence Realty vs. BRT Realty Trust | Independence Realty vs. UDR Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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