Correlation Between Lithia Motors and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and BE Semiconductor 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 BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and BE Semiconductor Industries, you can compare the effects of market volatilities on Lithia Motors and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and BE Semiconductor.
Diversification Opportunities for Lithia Motors and BE Semiconductor
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithia and BESIY is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Lithia Motors i.e., Lithia Motors and BE Semiconductor go up and down completely randomly.
Pair Corralation between Lithia Motors and BE Semiconductor
Considering the 90-day investment horizon Lithia Motors is expected to generate 0.39 times more return on investment than BE Semiconductor. However, Lithia Motors is 2.59 times less risky than BE Semiconductor. It trades about 0.23 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.04 per unit of risk. If you would invest 34,795 in Lithia Motors on November 4, 2024 and sell it today you would earn a total of 2,815 from holding Lithia Motors or generate 8.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithia Motors vs. BE Semiconductor Industries
Performance |
| Timeline |
| Lithia Motors |
| BE Semiconductor Ind |
Lithia Motors and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia Motors and BE Semiconductor
The main advantage of trading using opposite Lithia Motors and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Lithia Motors vs. Sonic Automotive | Lithia Motors vs. AutoNation | Lithia Motors vs. Asbury Automotive Group | Lithia Motors vs. Penske Automotive Group |
| BE Semiconductor vs. Lasertec | BE Semiconductor vs. Tokyo Electron Ltd | BE Semiconductor vs. Asm Pacific Technology | BE Semiconductor vs. Sumco Corp ADR |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |