Correlation Between Lithia Motors and GRUPO CARSO-A1
Can any of the company-specific risk be diversified away by investing in both Lithia Motors and GRUPO CARSO-A1 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 GRUPO CARSO-A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithia Motors and GRUPO CARSO A1, you can compare the effects of market volatilities on Lithia Motors and GRUPO CARSO-A1 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 GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and GRUPO CARSO-A1.
Diversification Opportunities for Lithia Motors and GRUPO CARSO-A1
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lithia and GRUPO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 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 GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of Lithia Motors i.e., Lithia Motors and GRUPO CARSO-A1 go up and down completely randomly.
Pair Corralation between Lithia Motors and GRUPO CARSO-A1
Assuming the 90 days horizon Lithia Motors is expected to generate 0.47 times more return on investment than GRUPO CARSO-A1. However, Lithia Motors is 2.11 times less risky than GRUPO CARSO-A1. It trades about 0.37 of its potential returns per unit of risk. GRUPO CARSO A1 is currently generating about 0.05 per unit of risk. If you would invest 30,952 in Lithia Motors on September 4, 2024 and sell it today you would earn a total of 5,648 from holding Lithia Motors or generate 18.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithia Motors vs. GRUPO CARSO A1
Performance |
| Timeline |
| Lithia Motors |
| GRUPO CARSO A1 |
Lithia Motors and GRUPO CARSO-A1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia Motors and GRUPO CARSO-A1
The main advantage of trading using opposite Lithia Motors and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, GRUPO CARSO-A1 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 GRUPO CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.| Lithia Motors vs. Chongqing Machinery Electric | Lithia Motors vs. EPSILON HEALTHCARE LTD | Lithia Motors vs. Harmony Gold Mining | Lithia Motors vs. Cardinal Health |
| GRUPO CARSO-A1 vs. TOTAL GABON | GRUPO CARSO-A1 vs. Walgreens Boots Alliance | GRUPO CARSO-A1 vs. Peak Resources Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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