Correlation Between LKQ and Mobileye Global

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

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

Diversification Opportunities for LKQ and Mobileye Global

-0.65

Correlation Coefficient

LKQ  Mobileye Global

Excellent diversification

The 3 months correlation between LKQ and Mobileye is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding LKQ Corp. and Mobileye Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileye Global Class 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 Mobileye Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileye Global Class has no effect on the direction of LKQ i.e., LKQ and Mobileye Global go up and down completely randomly.

Pair Corralation between LKQ and Mobileye Global

Considering the 90-day investment horizon LKQ Corporation is expected to generate 0.34 times more return on investment than Mobileye Global. However, LKQ Corporation is 2.97 times less risky than Mobileye Global. It trades about 0.14 of its potential returns per unit of risk. Mobileye Global Class is currently generating about -0.07 per unit of risk. If you would invest  3,663  in LKQ Corporation on December 27, 2024 and sell it today you would earn a total of  436.00  from holding LKQ Corporation or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

LKQ Corp.  vs.  Mobileye Global Class

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.

Mobileye Global Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mobileye Global Class 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 essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LKQ and Mobileye Global

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

The idea behind LKQ Corporation and Mobileye Global Class 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.