Correlation Between Penske Automotive and WIMFARM SA
Can any of the company-specific risk be diversified away by investing in both Penske Automotive and WIMFARM SA 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 Penske Automotive and WIMFARM SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penske Automotive Group and WIMFARM SA EO, you can compare the effects of market volatilities on Penske Automotive and WIMFARM SA 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 Penske Automotive with a short position of WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penske Automotive and WIMFARM SA.
Diversification Opportunities for Penske Automotive and WIMFARM SA
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Penske and WIMFARM is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Penske Automotive Group and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO and Penske Automotive 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 Penske Automotive Group are associated (or correlated) with WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Penske Automotive i.e., Penske Automotive and WIMFARM SA go up and down completely randomly.
Pair Corralation between Penske Automotive and WIMFARM SA
Assuming the 90 days horizon Penske Automotive is expected to generate 2.4 times less return on investment than WIMFARM SA. But when comparing it to its historical volatility, Penske Automotive Group is 2.75 times less risky than WIMFARM SA. It trades about 0.05 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 311.00 in WIMFARM SA EO on September 3, 2024 and sell it today you would earn a total of 15.00 from holding WIMFARM SA EO or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penske Automotive Group vs. WIMFARM SA EO
Performance |
| Timeline |
| Penske Automotive |
| WIMFARM SA EO |
Penske Automotive and WIMFARM SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penske Automotive and WIMFARM SA
The main advantage of trading using opposite Penske Automotive and WIMFARM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penske Automotive position performs unexpectedly, WIMFARM SA 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 WIMFARM SA will offset losses from the drop in WIMFARM SA's long position.| Penske Automotive vs. WIMFARM SA EO | Penske Automotive vs. Granite Construction | Penske Automotive vs. ANTA SPORTS PRODUCT | Penske Automotive vs. PARKEN Sport Entertainment |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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