Correlation Between PACCAR and Better Home
Can any of the company-specific risk be diversified away by investing in both PACCAR and Better Home 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 Better Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Better Home Finance, you can compare the effects of market volatilities on PACCAR and Better Home 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 Better Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Better Home.
Diversification Opportunities for PACCAR and Better Home
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PACCAR and Better is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Better Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Home Finance 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 Better Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Home Finance has no effect on the direction of PACCAR i.e., PACCAR and Better Home go up and down completely randomly.
Pair Corralation between PACCAR and Better Home
Given the investment horizon of 90 days PACCAR is expected to generate 7.02 times less return on investment than Better Home. But when comparing it to its historical volatility, PACCAR Inc is 9.43 times less risky than Better Home. It trades about 0.19 of its potential returns per unit of risk. Better Home Finance is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Better Home Finance on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Better Home Finance or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 51.56% |
| Values | Daily Returns |
PACCAR Inc vs. Better Home Finance
Performance |
| Timeline |
| PACCAR Inc |
| Better Home Finance |
PACCAR and Better Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Better Home
The main advantage of trading using opposite PACCAR and Better Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Better Home 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 Better Home will offset losses from the drop in Better Home's long position.| PACCAR vs. Aquagold International | PACCAR vs. Thrivent High Yield | PACCAR vs. Morningstar Unconstrained Allocation | PACCAR vs. Via Renewables |
| Better Home vs. GameStop Corp | Better Home vs. Yuexiu Transport Infrastructure | Better Home vs. Playstudios | Better Home vs. Sandstorm Gold Ltd |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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