Correlation Between PACCAR and Joint Stock
Can any of the company-specific risk be diversified away by investing in both PACCAR and Joint Stock 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 Joint Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Joint Stock, you can compare the effects of market volatilities on PACCAR and Joint Stock 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 Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Joint Stock.
Diversification Opportunities for PACCAR and Joint Stock
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between PACCAR and Joint is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of PACCAR i.e., PACCAR and Joint Stock go up and down completely randomly.
Pair Corralation between PACCAR and Joint Stock
Given the investment horizon of 90 days PACCAR is expected to generate 1.42 times less return on investment than Joint Stock. But when comparing it to its historical volatility, PACCAR Inc is 1.55 times less risky than Joint Stock. It trades about 0.05 of its potential returns per unit of risk. Joint Stock is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,824 in Joint Stock on September 14, 2024 and sell it today you would earn a total of 1,884 from holding Joint Stock or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.58% |
| Values | Daily Returns |
PACCAR Inc vs. Joint Stock
Performance |
| Timeline |
| PACCAR Inc |
| Joint Stock |
PACCAR and Joint Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Joint Stock
The main advantage of trading using opposite PACCAR and Joint Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Joint Stock 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 Joint Stock will offset losses from the drop in Joint Stock's long position.The idea behind PACCAR Inc and Joint Stock pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Joint Stock vs. SentinelOne | Joint Stock vs. BlackBerry | Joint Stock vs. Global Blue Group | Joint Stock vs. Aurora Mobile |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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