Correlation Between Gaming and PACCAR
Can any of the company-specific risk be diversified away by investing in both Gaming 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 Gaming and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming and Leisure and PACCAR Inc, you can compare the effects of market volatilities on Gaming 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 Gaming with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and PACCAR.
Diversification Opportunities for Gaming and PACCAR
Very weak diversification
The 3 months correlation between Gaming and PACCAR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Gaming 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 Gaming and Leisure 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 Gaming i.e., Gaming and PACCAR go up and down completely randomly.
Pair Corralation between Gaming and PACCAR
Assuming the 90 days horizon Gaming is expected to generate 5.29 times less return on investment than PACCAR. But when comparing it to its historical volatility, Gaming and Leisure is 1.33 times less risky than PACCAR. It trades about 0.02 of its potential returns per unit of risk. PACCAR Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,138 in PACCAR Inc on October 16, 2024 and sell it today you would earn a total of 4,264 from holding PACCAR Inc or generate 69.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gaming and Leisure vs. PACCAR Inc
Performance |
| Timeline |
| Gaming and Leisure |
| PACCAR Inc |
Gaming and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming and PACCAR
The main advantage of trading using opposite Gaming and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming 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.| Gaming vs. FIRST SAVINGS FINL | Gaming vs. New Residential Investment | Gaming vs. VARIOUS EATERIES LS | Gaming vs. MAG SILVER |
| PACCAR vs. PT Wintermar Offshore | PACCAR vs. Gaming and Leisure | PACCAR vs. EIDESVIK OFFSHORE NK | PACCAR vs. Geely Automobile Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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