Correlation Between LKQ and Carbon Revolution
Can any of the company-specific risk be diversified away by investing in both LKQ and Carbon Revolution 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 LKQ and Carbon Revolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LKQ Corporation and Carbon Revolution Public, you can compare the effects of market volatilities on LKQ and Carbon Revolution 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 LKQ with a short position of Carbon Revolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of LKQ and Carbon Revolution.
Diversification Opportunities for LKQ and Carbon Revolution
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LKQ and Carbon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding LKQ Corp. and Carbon Revolution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Revolution Public and LKQ 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 LKQ Corporation are associated (or correlated) with Carbon Revolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Revolution Public has no effect on the direction of LKQ i.e., LKQ and Carbon Revolution go up and down completely randomly.
Pair Corralation between LKQ and Carbon Revolution
Considering the 90-day investment horizon LKQ is expected to generate 12.63 times less return on investment than Carbon Revolution. But when comparing it to its historical volatility, LKQ Corporation is 29.79 times less risky than Carbon Revolution. It trades about 0.31 of its potential returns per unit of risk. Carbon Revolution Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 389.00 in Carbon Revolution Public on October 24, 2024 and sell it today you would earn a total of 108.00 from holding Carbon Revolution Public or generate 27.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LKQ Corp. vs. Carbon Revolution Public
Performance |
Timeline |
LKQ Corporation |
Carbon Revolution Public |
LKQ and Carbon Revolution Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LKQ and Carbon Revolution
The main advantage of trading using opposite LKQ and Carbon Revolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LKQ position performs unexpectedly, Carbon Revolution 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 Carbon Revolution will offset losses from the drop in Carbon Revolution's long position.The idea behind LKQ Corporation and Carbon Revolution Public 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.Carbon Revolution vs. Douglas Emmett | Carbon Revolution vs. Orion Office Reit | Carbon Revolution vs. Live Ventures | Carbon Revolution vs. City Office REIT |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Stocks Directory Find actively traded stocks across global markets |