Correlation Between PACCAR and Sundance Strategies
Can any of the company-specific risk be diversified away by investing in both PACCAR and Sundance Strategies 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 Sundance Strategies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Sundance Strategies, you can compare the effects of market volatilities on PACCAR and Sundance Strategies 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 Sundance Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Sundance Strategies.
Diversification Opportunities for PACCAR and Sundance Strategies
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between PACCAR and Sundance is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Sundance Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sundance Strategies 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 Sundance Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sundance Strategies has no effect on the direction of PACCAR i.e., PACCAR and Sundance Strategies go up and down completely randomly.
Pair Corralation between PACCAR and Sundance Strategies
Given the investment horizon of 90 days PACCAR Inc is expected to generate 0.43 times more return on investment than Sundance Strategies. However, PACCAR Inc is 2.32 times less risky than Sundance Strategies. It trades about -0.02 of its potential returns per unit of risk. Sundance Strategies is currently generating about -0.21 per unit of risk. If you would invest 11,613 in PACCAR Inc on September 12, 2024 and sell it today you would lose (76.00) from holding PACCAR Inc or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. Sundance Strategies
Performance |
| Timeline |
| PACCAR Inc |
| Sundance Strategies |
PACCAR and Sundance Strategies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Sundance Strategies
The main advantage of trading using opposite PACCAR and Sundance Strategies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Sundance Strategies 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 Sundance Strategies will offset losses from the drop in Sundance Strategies' long position.The idea behind PACCAR Inc and Sundance Strategies 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.| Sundance Strategies vs. Thor Industries | Sundance Strategies vs. Asure Software | Sundance Strategies vs. Adient PLC | Sundance Strategies vs. PACCAR Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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