Correlation Between Lithia Motors and Cheetah Net
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and Cheetah Net 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 Cheetah Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and Cheetah Net Supply, you can compare the effects of market volatilities on Lithia Motors and Cheetah Net 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 Cheetah Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and Cheetah Net.
Diversification Opportunities for Lithia Motors and Cheetah Net
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lithia and Cheetah is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and Cheetah Net Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Net Supply 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 Cheetah Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheetah Net Supply has no effect on the direction of Lithia Motors i.e., Lithia Motors and Cheetah Net go up and down completely randomly.
Pair Corralation between Lithia Motors and Cheetah Net
Considering the 90-day investment horizon Lithia Motors is expected to generate 0.31 times more return on investment than Cheetah Net. However, Lithia Motors is 3.24 times less risky than Cheetah Net. It trades about 0.38 of its potential returns per unit of risk. Cheetah Net Supply is currently generating about -0.48 per unit of risk. If you would invest 33,876 in Lithia Motors on August 28, 2024 and sell it today you would earn a total of 5,551 from holding Lithia Motors or generate 16.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lithia Motors vs. Cheetah Net Supply
Performance |
| Timeline |
| Lithia Motors |
| Cheetah Net Supply |
Lithia Motors and Cheetah Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia Motors and Cheetah Net
The main advantage of trading using opposite Lithia Motors and Cheetah Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, Cheetah Net 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 Cheetah Net will offset losses from the drop in Cheetah Net's long position.| Lithia Motors vs. Sonic Automotive | Lithia Motors vs. AutoNation | Lithia Motors vs. Asbury Automotive Group | Lithia Motors vs. Penske Automotive Group |
| Cheetah Net vs. Inflection Point Acquisition | Cheetah Net vs. Analog Devices | Cheetah Net vs. Citizens Bancorp Investment | Cheetah Net vs. Allient |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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