Correlation Between PACCAR and Gaming
Can any of the company-specific risk be diversified away by investing in both PACCAR and Gaming 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 PACCAR and Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Gaming and Leisure, you can compare the effects of market volatilities on PACCAR and Gaming 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 PACCAR with a short position of Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Gaming.
Diversification Opportunities for PACCAR and Gaming
Very weak diversification
The 3 months correlation between PACCAR and Gaming is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and PACCAR 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 PACCAR Inc are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of PACCAR i.e., PACCAR and Gaming go up and down completely randomly.
Pair Corralation between PACCAR and Gaming
Assuming the 90 days horizon PACCAR Inc is expected to generate 1.33 times more return on investment than Gaming. However, PACCAR is 1.33 times more volatile than Gaming and Leisure. It trades about 0.08 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.02 per unit of risk. If you would invest 6,138 in PACCAR Inc on October 16, 2024 and sell it today you would earn a total of 4,264 from holding PACCAR Inc or generate 69.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
PACCAR Inc vs. Gaming and Leisure
Performance |
| Timeline |
| PACCAR Inc |
| Gaming and Leisure |
PACCAR and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Gaming
The main advantage of trading using opposite PACCAR and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| PACCAR vs. PT Wintermar Offshore | PACCAR vs. Gaming and Leisure | PACCAR vs. EIDESVIK OFFSHORE NK | PACCAR vs. Geely Automobile Holdings |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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