Correlation Between Daimler Truck and Palfinger
Can any of the company-specific risk be diversified away by investing in both Daimler Truck and Palfinger 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 Daimler Truck and Palfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daimler Truck Holding and Palfinger AG, you can compare the effects of market volatilities on Daimler Truck and Palfinger 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 Daimler Truck with a short position of Palfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daimler Truck and Palfinger.
Diversification Opportunities for Daimler Truck and Palfinger
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daimler and Palfinger is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Daimler Truck Holding and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger AG and Daimler Truck 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 Daimler Truck Holding are associated (or correlated) with Palfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palfinger AG has no effect on the direction of Daimler Truck i.e., Daimler Truck and Palfinger go up and down completely randomly.
Pair Corralation between Daimler Truck and Palfinger
Assuming the 90 days horizon Daimler Truck Holding is expected to under-perform the Palfinger. But the pink sheet apears to be less risky and, when comparing its historical volatility, Daimler Truck Holding is 1.18 times less risky than Palfinger. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Palfinger AG is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 2,467 in Palfinger AG on September 1, 2024 and sell it today you would lose (267.00) from holding Palfinger AG or give up 10.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daimler Truck Holding vs. Palfinger AG
Performance |
| Timeline |
| Daimler Truck Holding |
| Palfinger AG |
Daimler Truck and Palfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daimler Truck and Palfinger
The main advantage of trading using opposite Daimler Truck and Palfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daimler Truck position performs unexpectedly, Palfinger 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 Palfinger will offset losses from the drop in Palfinger's long position.| Daimler Truck vs. Hino Motors Ltd | Daimler Truck vs. Volvo AB ADR | Daimler Truck vs. Columbus McKinnon | Daimler Truck vs. Hyster Yale Materials Handling |
| Palfinger vs. American Premium Water | Palfinger vs. Arts Way Manufacturing Co | Palfinger vs. Astec Industries | Palfinger vs. Alamo Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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