Correlation Between Lithia and Western Acquisition
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By analyzing existing cross correlation between Lithia Motors 4625 and Western Acquisition Ventures, you can compare the effects of market volatilities on Lithia and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia and Western Acquisition.
Diversification Opportunities for Lithia and Western Acquisition
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lithia and Western is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors 4625 and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Lithia i.e., Lithia and Western Acquisition go up and down completely randomly.
Pair Corralation between Lithia and Western Acquisition
Assuming the 90 days trading horizon Lithia Motors 4625 is expected to generate 41.42 times more return on investment than Western Acquisition. However, Lithia is 41.42 times more volatile than Western Acquisition Ventures. It trades about 0.06 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.02 per unit of risk. If you would invest 9,409 in Lithia Motors 4625 on September 3, 2024 and sell it today you would lose (647.00) from holding Lithia Motors 4625 or give up 6.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.99% |
| Values | Daily Returns |
Lithia Motors 4625 vs. Western Acquisition Ventures
Performance |
| Timeline |
| Lithia Motors 4625 |
| Western Acquisition |
Lithia and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithia and Western Acquisition
The main advantage of trading using opposite Lithia and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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