Correlation Between ECARX Holdings and LKQ
Can any of the company-specific risk be diversified away by investing in both ECARX Holdings 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 ECARX Holdings and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECARX Holdings Class and LKQ Corporation, you can compare the effects of market volatilities on ECARX Holdings 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 ECARX Holdings with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECARX Holdings and LKQ.
Diversification Opportunities for ECARX Holdings and LKQ
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between ECARX and LKQ is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ECARX Holdings Class and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and ECARX Holdings 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 ECARX Holdings Class 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 ECARX Holdings i.e., ECARX Holdings and LKQ go up and down completely randomly.
Pair Corralation between ECARX Holdings and LKQ
Considering the 90-day investment horizon ECARX Holdings Class is expected to under-perform the LKQ. In addition to that, ECARX Holdings is 3.39 times more volatile than LKQ Corporation. It trades about -0.04 of its total potential returns per unit of risk. LKQ Corporation is currently generating about -0.04 per unit of volatility. If you would invest 5,185 in LKQ Corporation on August 31, 2024 and sell it today you would lose (1,256) from holding LKQ Corporation or give up 24.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECARX Holdings Class vs. LKQ Corp.
Performance |
| Timeline |
| ECARX Holdings Class |
| LKQ Corporation |
ECARX Holdings and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECARX Holdings and LKQ
The main advantage of trading using opposite ECARX Holdings and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECARX Holdings 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.| ECARX Holdings vs. Dorman Products | ECARX Holdings vs. Monro Muffler Brake | ECARX Holdings vs. Standard Motor Products | ECARX Holdings vs. Stoneridge |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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