Correlation Between Warby Parker and LKQ
Can any of the company-specific risk be diversified away by investing in both Warby Parker 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 Warby Parker and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warby Parker and LKQ Corporation, you can compare the effects of market volatilities on Warby Parker 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 Warby Parker with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warby Parker and LKQ.
Diversification Opportunities for Warby Parker and LKQ
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Warby and LKQ is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Warby Parker and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Warby Parker 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 Warby Parker 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 Warby Parker i.e., Warby Parker and LKQ go up and down completely randomly.
Pair Corralation between Warby Parker and LKQ
Given the investment horizon of 90 days Warby Parker is expected to generate 1.98 times more return on investment than LKQ. However, Warby Parker is 1.98 times more volatile than LKQ Corporation. It trades about 0.47 of its potential returns per unit of risk. LKQ Corporation is currently generating about 0.2 per unit of risk. If you would invest 1,757 in Warby Parker on September 4, 2024 and sell it today you would earn a total of 528.00 from holding Warby Parker or generate 30.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warby Parker vs. LKQ Corp.
Performance |
| Timeline |
| Warby Parker |
| LKQ Corporation |
Warby Parker and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warby Parker and LKQ
The main advantage of trading using opposite Warby Parker and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warby Parker 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.| Warby Parker vs. Alcon AG | Warby Parker vs. The Cooper Companies, | Warby Parker vs. AngioDynamics | Warby Parker vs. AptarGroup |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |