Correlation Between Marketing Worldwide and LKQ

Can any of the company-specific risk be diversified away by investing in both Marketing Worldwide 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 Marketing Worldwide and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marketing Worldwide and LKQ Corporation, you can compare the effects of market volatilities on Marketing Worldwide 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 Marketing Worldwide with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marketing Worldwide and LKQ.

Diversification Opportunities for Marketing Worldwide and LKQ

0.11

Correlation Coefficient

Marketing Worldwide  LKQ

Average diversification

The 3 months correlation between Marketing and LKQ is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Marketing Worldwide and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Marketing Worldwide 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 Marketing Worldwide 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 Marketing Worldwide i.e., Marketing Worldwide and LKQ go up and down completely randomly.

Pair Corralation between Marketing Worldwide and LKQ

Given the investment horizon of 90 days Marketing Worldwide is expected to generate 23.36 times more return on investment than LKQ. However, Marketing Worldwide is 23.36 times more volatile than LKQ Corporation. It trades about 0.15 of its potential returns per unit of risk. LKQ Corporation is currently generating about -0.04 per unit of risk. If you would invest  0.02  in Marketing Worldwide on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Marketing Worldwide or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.16%
Values	Daily Returns

Marketing Worldwide  vs.  LKQ Corp.

Marketing Worldwide

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marketing Worldwide are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Marketing Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

LKQ Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LKQ Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, LKQ is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Marketing Worldwide and LKQ

The main advantage of trading using opposite Marketing Worldwide and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marketing Worldwide 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.

The idea behind Marketing Worldwide and LKQ Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.