Correlation Between Adient PLC and PACCAR
Can any of the company-specific risk be diversified away by investing in both Adient PLC 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 Adient PLC and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and PACCAR Inc, you can compare the effects of market volatilities on Adient PLC 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 Adient PLC with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and PACCAR.
Diversification Opportunities for Adient PLC and PACCAR
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adient and PACCAR is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Adient PLC 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 Adient PLC 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 Adient PLC i.e., Adient PLC and PACCAR go up and down completely randomly.
Pair Corralation between Adient PLC and PACCAR
Given the investment horizon of 90 days Adient PLC is expected to under-perform the PACCAR. In addition to that, Adient PLC is 1.31 times more volatile than PACCAR Inc. It trades about -0.11 of its total potential returns per unit of risk. PACCAR Inc is currently generating about 0.0 per unit of volatility. If you would invest 12,146 in PACCAR Inc on September 3, 2024 and sell it today you would lose (446.00) from holding PACCAR Inc or give up 3.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. PACCAR Inc
Performance |
| Timeline |
| Adient PLC |
| PACCAR Inc |
Adient PLC and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and PACCAR
The main advantage of trading using opposite Adient PLC and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC 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.| Adient PLC vs. Allison Transmission Holdings | Adient PLC vs. Aptiv PLC | Adient PLC vs. LKQ Corporation | Adient PLC vs. Lear Corporation |
| PACCAR vs. Manitowoc | PACCAR vs. Alamo Group | PACCAR vs. AGCO Corporation | PACCAR vs. Hyster Yale Materials Handling |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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