Correlation Between Lithia Motors and Pinstripes Holdings
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and Pinstripes Holdings 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 Pinstripes Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and Pinstripes Holdings, you can compare the effects of market volatilities on Lithia Motors and Pinstripes Holdings 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 Pinstripes Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and Pinstripes Holdings.
Diversification Opportunities for Lithia Motors and Pinstripes Holdings
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithia and Pinstripes is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and Pinstripes Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinstripes 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 Pinstripes Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinstripes Holdings has no effect on the direction of Lithia Motors i.e., Lithia Motors and Pinstripes Holdings go up and down completely randomly.
Pair Corralation between Lithia Motors and Pinstripes Holdings
Considering the 90-day investment horizon Lithia Motors is expected to generate 1.45 times less return on investment than Pinstripes Holdings. But when comparing it to its historical volatility, Lithia Motors is 3.33 times less risky than Pinstripes Holdings. It trades about 0.25 of its potential returns per unit of risk. Pinstripes Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Pinstripes Holdings on August 26, 2024 and sell it today you would earn a total of 18.00 from holding Pinstripes Holdings or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithia Motors vs. Pinstripes Holdings
Performance |
| Timeline |
| Lithia Motors |
| Pinstripes Holdings |
Lithia Motors and Pinstripes Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia Motors and Pinstripes Holdings
The main advantage of trading using opposite Lithia Motors and Pinstripes Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, Pinstripes Holdings 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 Pinstripes Holdings will offset losses from the drop in Pinstripes Holdings' long position.| Lithia Motors vs. Kingsway Financial Services | Lithia Motors vs. KAR Auction Services | Lithia Motors vs. Cango Inc | Lithia Motors vs. Vroom Inc |
| Pinstripes Holdings vs. Grupo Televisa SAB | Pinstripes Holdings vs. Ziff Davis | Pinstripes Holdings vs. NETGEAR | Pinstripes Holdings vs. Radcom |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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