Correlation Between Aeye and PACCAR
Can any of the company-specific risk be diversified away by investing in both Aeye 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 Aeye and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and PACCAR Inc, you can compare the effects of market volatilities on Aeye 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 Aeye with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and PACCAR.
Diversification Opportunities for Aeye and PACCAR
Very good diversification
The 3 months correlation between Aeye and PACCAR is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Aeye 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 Aeye Inc 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 Aeye i.e., Aeye and PACCAR go up and down completely randomly.
Pair Corralation between Aeye and PACCAR
Given the investment horizon of 90 days Aeye Inc is expected to under-perform the PACCAR. In addition to that, Aeye is 6.92 times more volatile than PACCAR Inc. It trades about 0.0 of its total potential returns per unit of risk. PACCAR Inc is currently generating about 0.07 per unit of volatility. If you would invest 8,980 in PACCAR Inc on August 31, 2024 and sell it today you would earn a total of 2,720 from holding PACCAR Inc or generate 30.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aeye Inc vs. PACCAR Inc
Performance |
| Timeline |
| Aeye Inc |
| PACCAR Inc |
Aeye and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and PACCAR
The main advantage of trading using opposite Aeye and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye 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.| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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