Correlation Between LKQ and Guess

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

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

Diversification Opportunities for LKQ and Guess

-0.8

Correlation Coefficient

LKQ  Guess

Pay attention - limited upside

The 3 months correlation between LKQ and Guess is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding LKQ Corp. and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc 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 Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of LKQ i.e., LKQ and Guess go up and down completely randomly.

Pair Corralation between LKQ and Guess

Considering the 90-day investment horizon LKQ Corporation is expected to generate 0.29 times more return on investment than Guess. However, LKQ Corporation is 3.42 times less risky than Guess. It trades about 0.13 of its potential returns per unit of risk. Guess Inc is currently generating about -0.04 per unit of risk. If you would invest  3,674  in LKQ Corporation on December 26, 2024 and sell it today you would earn a total of  425.00  from holding LKQ Corporation or generate 11.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

LKQ Corp.  vs.  Guess Inc

LKQ Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LKQ Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, LKQ may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guess Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guess Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with LKQ and Guess

The main advantage of trading using opposite LKQ and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LKQ position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.

The idea behind LKQ Corporation and Guess Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.