Correlation Between PACCAR and PS International
Can any of the company-specific risk be diversified away by investing in both PACCAR and PS International 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 PS International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and PS International Group, you can compare the effects of market volatilities on PACCAR and PS International 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 PS International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and PS International.
Diversification Opportunities for PACCAR and PS International
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PACCAR and PSIG is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and PS International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PS International 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 PS International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PS International has no effect on the direction of PACCAR i.e., PACCAR and PS International go up and down completely randomly.
Pair Corralation between PACCAR and PS International
Given the investment horizon of 90 days PACCAR Inc is expected to under-perform the PS International. But the stock apears to be less risky and, when comparing its historical volatility, PACCAR Inc is 5.81 times less risky than PS International. The stock trades about -0.09 of its potential returns per unit of risk. The PS International Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 47.00 in PS International Group on November 28, 2024 and sell it today you would earn a total of 4.00 from holding PS International Group or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. PS International Group
Performance |
| Timeline |
| PACCAR Inc |
| PS International |
PACCAR and PS International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and PS International
The main advantage of trading using opposite PACCAR and PS International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, PS International 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 PS International will offset losses from the drop in PS International's long position.The idea behind PACCAR Inc and PS International Group 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.| PS International vs. Ryder System | PS International vs. Alto Neuroscience, | PS International vs. FTAI Aviation Ltd | PS International vs. Schweiter Technologies AG |
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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