Correlation Between PACCAR and Savers Value
Can any of the company-specific risk be diversified away by investing in both PACCAR and Savers Value 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 Savers Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Savers Value Village,, you can compare the effects of market volatilities on PACCAR and Savers Value 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 Savers Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Savers Value.
Diversification Opportunities for PACCAR and Savers Value
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PACCAR and Savers is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Savers Value Village, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savers Value Village, 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 Savers Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savers Value Village, has no effect on the direction of PACCAR i.e., PACCAR and Savers Value go up and down completely randomly.
Pair Corralation between PACCAR and Savers Value
Given the investment horizon of 90 days PACCAR Inc is expected to generate 0.58 times more return on investment than Savers Value. However, PACCAR Inc is 1.74 times less risky than Savers Value. It trades about 0.23 of its potential returns per unit of risk. Savers Value Village, is currently generating about -0.06 per unit of risk. If you would invest 10,463 in PACCAR Inc on August 31, 2024 and sell it today you would earn a total of 1,155 from holding PACCAR Inc or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. Savers Value Village,
Performance |
| Timeline |
| PACCAR Inc |
| Savers Value Village, |
PACCAR and Savers Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Savers Value
The main advantage of trading using opposite PACCAR and Savers Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Savers Value 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 Savers Value will offset losses from the drop in Savers Value's long position.The idea behind PACCAR Inc and Savers Value Village, 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.| Savers Value vs. American Axle Manufacturing | Savers Value vs. Visteon Corp | Savers Value vs. PACCAR Inc | Savers Value vs. SEI Investments |
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.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |