Correlation Between Las Vegas and Paccar
Can any of the company-specific risk be diversified away by investing in both Las Vegas and Paccar 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 Las Vegas and Paccar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and Paccar Inc, you can compare the effects of market volatilities on Las Vegas and Paccar 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 Las Vegas with a short position of Paccar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Paccar.
Diversification Opportunities for Las Vegas and Paccar
Poor diversification
The 3 months correlation between Las and Paccar is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Paccar Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paccar Inc and Las Vegas 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 Las Vegas Sands are associated (or correlated) with Paccar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paccar Inc has no effect on the direction of Las Vegas i.e., Las Vegas and Paccar go up and down completely randomly.
Pair Corralation between Las Vegas and Paccar
Assuming the 90 days trading horizon Las Vegas is expected to generate 8.14 times less return on investment than Paccar. In addition to that, Las Vegas is 1.15 times more volatile than Paccar Inc. It trades about 0.01 of its total potential returns per unit of risk. Paccar Inc is currently generating about 0.09 per unit of volatility. If you would invest 6,331 in Paccar Inc on August 31, 2024 and sell it today you would earn a total of 5,229 from holding Paccar Inc or generate 82.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.53% |
| Values | Daily Returns |
Las Vegas Sands vs. Paccar Inc
Performance |
| Timeline |
| Las Vegas Sands |
| Paccar Inc |
Las Vegas and Paccar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and Paccar
The main advantage of trading using opposite Las Vegas and Paccar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, Paccar 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 Paccar will offset losses from the drop in Paccar's long position.| Las Vegas vs. Erste Group Bank | Las Vegas vs. British American Tobacco | Las Vegas vs. X FAB Silicon Foundries | Las Vegas vs. Sparebank 1 SR |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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