Correlation Between Worksport and LKQ
Can any of the company-specific risk be diversified away by investing in both Worksport 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 Worksport and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worksport and LKQ Corporation, you can compare the effects of market volatilities on Worksport 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 Worksport with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worksport and LKQ.
Diversification Opportunities for Worksport and LKQ
Excellent diversification
The 3 months correlation between Worksport and LKQ is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Worksport and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Worksport 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 Worksport 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 Worksport i.e., Worksport and LKQ go up and down completely randomly.
Pair Corralation between Worksport and LKQ
Given the investment horizon of 90 days Worksport is expected to under-perform the LKQ. In addition to that, Worksport is 4.02 times more volatile than LKQ Corporation. It trades about -0.03 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worksport vs. LKQ Corp.
Performance |
| Timeline |
| Worksport |
| LKQ Corporation |
Worksport and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worksport and LKQ
The main advantage of trading using opposite Worksport and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worksport 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.| Worksport vs. Aeye Inc | Worksport vs. Luminar Technologies | Worksport vs. Modine Manufacturing | Worksport vs. Quantumscape Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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