Correlation Between PACCAR and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both PACCAR and Metropolitan Bank 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 Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Metropolitan Bank and, you can compare the effects of market volatilities on PACCAR and Metropolitan Bank 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 Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Metropolitan Bank.
Diversification Opportunities for PACCAR and Metropolitan Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PACCAR and Metropolitan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Metropolitan Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank 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 Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank has no effect on the direction of PACCAR i.e., PACCAR and Metropolitan Bank go up and down completely randomly.
Pair Corralation between PACCAR and Metropolitan Bank
If you would invest 10,640 in PACCAR Inc on August 30, 2024 and sell it today you would earn a total of 978.00 from holding PACCAR Inc or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. Metropolitan Bank and
Performance |
| Timeline |
| PACCAR Inc |
| Metropolitan Bank |
PACCAR and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Metropolitan Bank
The main advantage of trading using opposite PACCAR and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.The idea behind PACCAR Inc and Metropolitan Bank and 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.| Metropolitan Bank vs. ServiceNow | Metropolitan Bank vs. Visteon Corp | Metropolitan Bank vs. PACCAR Inc | Metropolitan Bank vs. Where Food Comes |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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