Correlation Between Gentex and LKQ
Can any of the company-specific risk be diversified away by investing in both Gentex 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 Gentex and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and LKQ Corporation, you can compare the effects of market volatilities on Gentex 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 Gentex with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and LKQ.
Diversification Opportunities for Gentex and LKQ
Average diversification
The 3 months correlation between Gentex and LKQ is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Gentex 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 Gentex 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 Gentex i.e., Gentex and LKQ go up and down completely randomly.
Pair Corralation between Gentex and LKQ
Given the investment horizon of 90 days Gentex is expected to generate 1.49 times more return on investment than LKQ. However, Gentex is 1.49 times more volatile than LKQ Corporation. It trades about 0.08 of its potential returns per unit of risk. LKQ Corporation is currently generating about 0.04 per unit of risk. If you would invest 2,952 in Gentex on August 24, 2024 and sell it today you would earn a total of 79.00 from holding Gentex or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gentex vs. LKQ Corp.
Performance |
| Timeline |
| Gentex |
| LKQ Corporation |
Gentex and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentex and LKQ
The main advantage of trading using opposite Gentex and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex 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.| Gentex vs. Fox Factory Holding | Gentex vs. Dana Inc | Gentex vs. Lear Corporation | Gentex vs. Commercial Vehicle Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Global Correlations Find global opportunities by holding instruments from different markets |