Correlation Between Victorias Secret and LKQ
Can any of the company-specific risk be diversified away by investing in both Victorias Secret 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 Victorias Secret and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victorias Secret Co and LKQ Corporation, you can compare the effects of market volatilities on Victorias Secret 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 Victorias Secret with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and LKQ.
Diversification Opportunities for Victorias Secret and LKQ
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Victorias and LKQ is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Victorias Secret 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 Victorias Secret Co 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 Victorias Secret i.e., Victorias Secret and LKQ go up and down completely randomly.
Pair Corralation between Victorias Secret and LKQ
Given the investment horizon of 90 days Victorias Secret Co is expected to under-perform the LKQ. In addition to that, Victorias Secret is 2.1 times more volatile than LKQ Corporation. It trades about -0.22 of its total potential returns per unit of risk. LKQ Corporation is currently generating about 0.09 per unit of volatility. If you would invest 3,928 in LKQ Corporation on December 1, 2024 and sell it today you would earn a total of 291.00 from holding LKQ Corporation or generate 7.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Victorias Secret Co vs. LKQ Corp.
Performance |
Timeline |
Victorias Secret |
LKQ Corporation |
Victorias Secret and LKQ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Victorias Secret and LKQ
The main advantage of trading using opposite Victorias Secret and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victorias Secret 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.Victorias Secret vs. Ross Stores | Victorias Secret vs. Childrens Place | Victorias Secret vs. Buckle Inc | Victorias Secret vs. Guess 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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