Correlation Between Lithia Motors and Original Bark
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and Original Bark 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 Lithia Motors and Original Bark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and Original Bark Co, you can compare the effects of market volatilities on Lithia Motors and Original Bark 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 Lithia Motors with a short position of Original Bark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and Original Bark.
Diversification Opportunities for Lithia Motors and Original Bark
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lithia and Original is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and Original Bark Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Original Bark and Lithia Motors 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 Lithia Motors are associated (or correlated) with Original Bark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Original Bark has no effect on the direction of Lithia Motors i.e., Lithia Motors and Original Bark go up and down completely randomly.
Pair Corralation between Lithia Motors and Original Bark
Considering the 90-day investment horizon Lithia Motors is expected to generate 3.14 times less return on investment than Original Bark. But when comparing it to its historical volatility, Lithia Motors is 2.15 times less risky than Original Bark. It trades about 0.31 of its potential returns per unit of risk. Original Bark Co is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 142.00 in Original Bark Co on August 31, 2024 and sell it today you would earn a total of 73.00 from holding Original Bark Co or generate 51.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lithia Motors vs. Original Bark Co
Performance |
| Timeline |
| Lithia Motors |
| Original Bark |
Lithia Motors and Original Bark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia Motors and Original Bark
The main advantage of trading using opposite Lithia Motors and Original Bark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, Original Bark 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 Original Bark will offset losses from the drop in Original Bark's long position.| Lithia Motors vs. Sonic Automotive | Lithia Motors vs. AutoNation | Lithia Motors vs. Asbury Automotive Group | Lithia Motors vs. Penske Automotive Group |
| Original Bark vs. Target | Original Bark vs. Lowes Companies | Original Bark vs. Kohls Corp | Original Bark vs. Walmart |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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