Correlation Between GAMESTOP and LKQ
Can any of the company-specific risk be diversified away by investing in both GAMESTOP 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 GAMESTOP and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and LKQ Corporation, you can compare the effects of market volatilities on GAMESTOP 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 GAMESTOP with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and LKQ.
Diversification Opportunities for GAMESTOP and LKQ
Modest diversification
The 3 months correlation between GAMESTOP and LKQ is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and GAMESTOP 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 GAMESTOP 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 GAMESTOP i.e., GAMESTOP and LKQ go up and down completely randomly.
Pair Corralation between GAMESTOP and LKQ
Assuming the 90 days trading horizon GAMESTOP is expected to generate 2.74 times more return on investment than LKQ. However, GAMESTOP is 2.74 times more volatile than LKQ Corporation. It trades about 0.01 of its potential returns per unit of risk. LKQ Corporation is currently generating about -0.03 per unit of risk. If you would invest 2,814 in GAMESTOP on October 26, 2024 and sell it today you would lose (22.00) from holding GAMESTOP or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMESTOP vs. LKQ Corp.
Performance |
| Timeline |
| GAMESTOP |
| LKQ Corporation |
GAMESTOP and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMESTOP and LKQ
The main advantage of trading using opposite GAMESTOP and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP 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.| GAMESTOP vs. Salesforce | GAMESTOP vs. ZhongAn Online P | GAMESTOP vs. PLAYMATES TOYS | GAMESTOP vs. GungHo Online Entertainment |
| LKQ vs. MOVIE GAMES SA | LKQ vs. Japan Medical Dynamic | LKQ vs. GAMESTOP | LKQ vs. Genertec Universal Medical |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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