Correlation Between Infrastrutture Wireless and LKQ

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

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

Diversification Opportunities for Infrastrutture Wireless and LKQ

-0.38

Correlation Coefficient

Infrastrutture Wireless  LKQ

Very good diversification

The 3 months correlation between Infrastrutture and LKQ is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Infrastrutture Wireless 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 Infrastrutture Wireless Italiane 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 Infrastrutture Wireless i.e., Infrastrutture Wireless and LKQ go up and down completely randomly.

Pair Corralation between Infrastrutture Wireless and LKQ

Assuming the 90 days horizon Infrastrutture Wireless Italiane is expected to generate 0.68 times more return on investment than LKQ. However, Infrastrutture Wireless Italiane is 1.47 times less risky than LKQ. It trades about 0.01 of its potential returns per unit of risk. LKQ Corporation is currently generating about -0.03 per unit of risk. If you would invest  937.00  in Infrastrutture Wireless Italiane on September 27, 2024 and sell it today you would earn a total of  10.00  from holding Infrastrutture Wireless Italiane or generate 1.07% return on investment over 90 days.

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

Infrastrutture Wireless Italia  vs.  LKQ Corp.

Infrastrutture Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite nearly stable basic indicators, LKQ is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Infrastrutture Wireless and LKQ

The main advantage of trading using opposite Infrastrutture Wireless and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infrastrutture Wireless 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 Infrastrutture Wireless Italiane 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.