Correlation Between Lithia Motors and Rush Enterprises

Can any of the company-specific risk be diversified away by investing in both Lithia Motors and Rush Enterprises 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 Rush Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lithia Motors and Rush Enterprises B, you can compare the effects of market volatilities on Lithia Motors and Rush Enterprises 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 Rush Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithia Motors and Rush Enterprises.

Diversification Opportunities for Lithia Motors and Rush Enterprises

-0.12

Correlation Coefficient

Lithia Motors  Rush Enterprises

Good diversification

The 3 months correlation between Lithia and Rush is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lithia Motors and Rush Enterprises B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rush Enterprises B 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 Rush Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rush Enterprises B has no effect on the direction of Lithia Motors i.e., Lithia Motors and Rush Enterprises go up and down completely randomly.

Pair Corralation between Lithia Motors and Rush Enterprises

Considering the 90-day investment horizon Lithia Motors is expected to under-perform the Rush Enterprises. In addition to that, Lithia Motors is 1.18 times more volatile than Rush Enterprises B. It trades about -0.02 of its total potential returns per unit of risk. Rush Enterprises B is currently generating about -0.02 per unit of volatility. If you would invest  5,384  in Rush Enterprises B on May 4, 2025 and sell it today you would lose (148.00) from holding Rush Enterprises B or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Lithia Motors  vs.  Rush Enterprises B

Lithia Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lithia Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lithia Motors is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Rush Enterprises B

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rush Enterprises B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Rush Enterprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lithia Motors and Rush Enterprises

The main advantage of trading using opposite Lithia Motors and Rush Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithia Motors position performs unexpectedly, Rush Enterprises 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 Rush Enterprises will offset losses from the drop in Rush Enterprises' long position.

The idea behind Lithia Motors and Rush Enterprises B pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..