Correlation Between Zimmer Biomet and LKQ
Can any of the company-specific risk be diversified away by investing in both Zimmer Biomet 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 Zimmer Biomet and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zimmer Biomet Holdings and LKQ Corporation, you can compare the effects of market volatilities on Zimmer Biomet 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 Zimmer Biomet with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimmer Biomet and LKQ.
Diversification Opportunities for Zimmer Biomet and LKQ
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zimmer and LKQ is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Zimmer Biomet 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 Zimmer Biomet Holdings 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 Zimmer Biomet i.e., Zimmer Biomet and LKQ go up and down completely randomly.
Pair Corralation between Zimmer Biomet and LKQ
Considering the 90-day investment horizon Zimmer Biomet Holdings is expected to generate 0.84 times more return on investment than LKQ. However, Zimmer Biomet Holdings is 1.19 times less risky than LKQ. It trades about -0.03 of its potential returns per unit of risk. LKQ Corporation is currently generating about -0.04 per unit of risk. If you would invest 13,366 in Zimmer Biomet Holdings on August 31, 2024 and sell it today you would lose (2,156) from holding Zimmer Biomet Holdings or give up 16.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zimmer Biomet Holdings vs. LKQ Corp.
Performance |
| Timeline |
| Zimmer Biomet Holdings |
| LKQ Corporation |
Zimmer Biomet and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zimmer Biomet and LKQ
The main advantage of trading using opposite Zimmer Biomet and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimmer Biomet 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.| Zimmer Biomet vs. Abbott Laboratories | Zimmer Biomet vs. Medtronic PLC | Zimmer Biomet vs. Edwards Lifesciences Corp | Zimmer Biomet vs. ZimVie Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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