Correlation Between AP Møller and Penske Automotive
Can any of the company-specific risk be diversified away by investing in both AP Møller and Penske Automotive 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 AP Møller and Penske Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Penske Automotive Group, you can compare the effects of market volatilities on AP Møller and Penske Automotive 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 AP Møller with a short position of Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Møller and Penske Automotive.
Diversification Opportunities for AP Møller and Penske Automotive
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DP4A and Penske is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and AP Møller 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 AP Mller are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of AP Møller i.e., AP Møller and Penske Automotive go up and down completely randomly.
Pair Corralation between AP Møller and Penske Automotive
Assuming the 90 days trading horizon AP Mller is expected to generate 2.05 times more return on investment than Penske Automotive. However, AP Møller is 2.05 times more volatile than Penske Automotive Group. It trades about 0.03 of its potential returns per unit of risk. Penske Automotive Group is currently generating about 0.05 per unit of risk. If you would invest 116,075 in AP Mller on September 2, 2024 and sell it today you would earn a total of 39,125 from holding AP Mller or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Mller vs. Penske Automotive Group
Performance |
| Timeline |
| AP Møller |
| Penske Automotive |
AP Møller and Penske Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Møller and Penske Automotive
The main advantage of trading using opposite AP Møller and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Møller position performs unexpectedly, Penske Automotive 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 Penske Automotive will offset losses from the drop in Penske Automotive's long position.| AP Møller vs. Wilh Wilhelmsen Holding | AP Møller vs. Superior Plus Corp | AP Møller vs. NMI Holdings | AP Møller vs. Origin Agritech |
| Penske Automotive vs. GLG LIFE TECH | Penske Automotive vs. ORMAT TECHNOLOGIES | Penske Automotive vs. ONWARD MEDICAL BV | Penske Automotive vs. Compugroup Medical SE |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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