Correlation Between Quaker Chemical and PACCAR
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and PACCAR 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 Quaker Chemical and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and PACCAR Inc, you can compare the effects of market volatilities on Quaker Chemical and PACCAR 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 Quaker Chemical with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and PACCAR.
Diversification Opportunities for Quaker Chemical and PACCAR
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Quaker and PACCAR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and PACCAR go up and down completely randomly.
Pair Corralation between Quaker Chemical and PACCAR
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the PACCAR. In addition to that, Quaker Chemical is 1.13 times more volatile than PACCAR Inc. It trades about -0.61 of its total potential returns per unit of risk. PACCAR Inc is currently generating about 0.0 per unit of volatility. If you would invest 10,420 in PACCAR Inc on October 15, 2024 and sell it today you would lose (18.00) from holding PACCAR Inc or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. PACCAR Inc
Performance |
| Timeline |
| Quaker Chemical |
| PACCAR Inc |
Quaker Chemical and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and PACCAR
The main advantage of trading using opposite Quaker Chemical and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, PACCAR 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 PACCAR will offset losses from the drop in PACCAR's long position.| Quaker Chemical vs. PLANT VEDA FOODS | Quaker Chemical vs. COFCO Joycome Foods | Quaker Chemical vs. Dave Busters Entertainment | Quaker Chemical vs. ANTA SPORTS PRODUCT |
| PACCAR vs. JAPAN TOBACCO UNSPADR12 | PACCAR vs. CyberArk Software | PACCAR vs. British American Tobacco | PACCAR vs. ASURE SOFTWARE |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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