Correlation Between Lithia Motors and Camping World
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and Camping World 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 Camping World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and Camping World Holdings, you can compare the effects of market volatilities on Lithia Motors and Camping World 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 Camping World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and Camping World.
Diversification Opportunities for Lithia Motors and Camping World
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lithia and Camping is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and Camping World Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camping World Holdings 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 Camping World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camping World Holdings has no effect on the direction of Lithia Motors i.e., Lithia Motors and Camping World go up and down completely randomly.
Pair Corralation between Lithia Motors and Camping World
Considering the 90-day investment horizon Lithia Motors is expected to generate 1.16 times less return on investment than Camping World. But when comparing it to its historical volatility, Lithia Motors is 2.27 times less risky than Camping World. It trades about 0.38 of its potential returns per unit of risk. Camping World Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,141 in Camping World Holdings on August 28, 2024 and sell it today you would earn a total of 373.00 from holding Camping World Holdings or generate 17.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithia Motors vs. Camping World Holdings
Performance |
| Timeline |
| Lithia Motors |
| Camping World Holdings |
Lithia Motors and Camping World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia Motors and Camping World
The main advantage of trading using opposite Lithia Motors and Camping World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, Camping World 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 Camping World will offset losses from the drop in Camping World's long position.| Lithia Motors vs. Sonic Automotive | Lithia Motors vs. AutoNation | Lithia Motors vs. Asbury Automotive Group | Lithia Motors vs. Penske Automotive Group |
| Camping World vs. Group 1 Automotive | Camping World vs. Sonic Automotive | Camping World vs. Penske Automotive Group | Camping World vs. Lithia Motors |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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