Correlation Between Lithia and Stepan
Specify exactly 2 symbols:
By analyzing existing cross correlation between Lithia Motors 4625 and Stepan Company, you can compare the effects of market volatilities on Lithia and Stepan 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 with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia and Stepan.
Diversification Opportunities for Lithia and Stepan
Good diversification
The 3 months correlation between Lithia and Stepan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors 4625 and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Lithia 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 4625 are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Lithia i.e., Lithia and Stepan go up and down completely randomly.
Pair Corralation between Lithia and Stepan
Assuming the 90 days trading horizon Lithia Motors 4625 is expected to generate 0.18 times more return on investment than Stepan. However, Lithia Motors 4625 is 5.46 times less risky than Stepan. It trades about 0.07 of its potential returns per unit of risk. Stepan Company is currently generating about -0.02 per unit of risk. If you would invest 9,348 in Lithia Motors 4625 on September 3, 2024 and sell it today you would earn a total of 394.00 from holding Lithia Motors 4625 or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.33% |
| Values | Daily Returns |
Lithia Motors 4625 vs. Stepan Company
Performance |
| Timeline |
| Lithia Motors 4625 |
| Stepan Company |
Lithia and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia and Stepan
The main advantage of trading using opposite Lithia and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Lithia vs. Western Acquisition Ventures | Lithia vs. Barrick Gold Corp | Lithia vs. Universal | Lithia vs. Inflection Point Acquisition |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |