Correlation Between Lithia Motors and Catheter Precision
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and Catheter Precision 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 Catheter Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and Catheter Precision, you can compare the effects of market volatilities on Lithia Motors and Catheter Precision 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 Catheter Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and Catheter Precision.
Diversification Opportunities for Lithia Motors and Catheter Precision
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithia and Catheter is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Lithia Motors i.e., Lithia Motors and Catheter Precision go up and down completely randomly.
Pair Corralation between Lithia Motors and Catheter Precision
Considering the 90-day investment horizon Lithia Motors is expected to under-perform the Catheter Precision. But the stock apears to be less risky and, when comparing its historical volatility, Lithia Motors is 4.76 times less risky than Catheter Precision. The stock trades about -0.29 of its potential returns per unit of risk. The Catheter Precision is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Catheter Precision on October 16, 2024 and sell it today you would earn a total of 9.00 from holding Catheter Precision or generate 25.71% 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. Catheter Precision
Performance |
| Timeline |
| Lithia Motors |
| Catheter Precision |
Lithia Motors and Catheter Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia Motors and Catheter Precision
The main advantage of trading using opposite Lithia Motors and Catheter Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, Catheter Precision 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 Catheter Precision will offset losses from the drop in Catheter Precision's long position.| Lithia Motors vs. Sonic Automotive | Lithia Motors vs. AutoNation | Lithia Motors vs. Asbury Automotive Group | Lithia Motors vs. Penske Automotive Group |
| Catheter Precision vs. Nyxoah | Catheter Precision vs. Tradeweb Markets | Catheter Precision vs. Lithia Motors | Catheter Precision vs. Skechers USA |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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