Correlation Between Aptiv PLC and LKQ
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and LKQ 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 Aptiv PLC and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and LKQ Corporation, you can compare the effects of market volatilities on Aptiv PLC and LKQ 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 Aptiv PLC with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and LKQ.
Diversification Opportunities for Aptiv PLC and LKQ
Very good diversification
The 3 months correlation between Aptiv and LKQ is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with LKQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LKQ Corporation has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and LKQ go up and down completely randomly.
Pair Corralation between Aptiv PLC and LKQ
Assuming the 90 days horizon Aptiv PLC is expected to generate 0.41 times more return on investment than LKQ. However, Aptiv PLC is 2.41 times less risky than LKQ. It trades about 0.13 of its potential returns per unit of risk. LKQ Corporation is currently generating about -0.15 per unit of risk. If you would invest 5,396 in Aptiv PLC on October 11, 2024 and sell it today you would earn a total of 91.00 from holding Aptiv PLC or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. LKQ Corp.
Performance |
| Timeline |
| Aptiv PLC |
| LKQ Corporation |
Aptiv PLC and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and LKQ
The main advantage of trading using opposite Aptiv PLC and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, LKQ 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 LKQ will offset losses from the drop in LKQ's long position.| Aptiv PLC vs. PT Astra International | Aptiv PLC vs. Superior Plus Corp | Aptiv PLC vs. NMI Holdings | Aptiv PLC vs. SIVERS SEMICONDUCTORS AB |
| LKQ vs. MCEWEN MINING INC | LKQ vs. DEVRY EDUCATION GRP | LKQ vs. Forsys Metals Corp | LKQ vs. Nordic Semiconductor ASA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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