Correlation Between Columbus McKinnon and PACCAR
Can any of the company-specific risk be diversified away by investing in both Columbus McKinnon 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 Columbus McKinnon and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbus McKinnon and PACCAR Inc, you can compare the effects of market volatilities on Columbus McKinnon 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 Columbus McKinnon with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbus McKinnon and PACCAR.
Diversification Opportunities for Columbus McKinnon and PACCAR
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbus and PACCAR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Columbus McKinnon and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Columbus McKinnon 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 Columbus McKinnon 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 Columbus McKinnon i.e., Columbus McKinnon and PACCAR go up and down completely randomly.
Pair Corralation between Columbus McKinnon and PACCAR
Given the investment horizon of 90 days Columbus McKinnon is expected to generate 1.97 times less return on investment than PACCAR. In addition to that, Columbus McKinnon is 1.25 times more volatile than PACCAR Inc. It trades about 0.03 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 6,398 in PACCAR Inc on August 28, 2024 and sell it today you would earn a total of 5,256 from holding PACCAR Inc or generate 82.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbus McKinnon vs. PACCAR Inc
Performance |
| Timeline |
| Columbus McKinnon |
| PACCAR Inc |
Columbus McKinnon and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbus McKinnon and PACCAR
The main advantage of trading using opposite Columbus McKinnon and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbus McKinnon 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.| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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