Correlation Between Penske Automotive and Inchcape Plc
Can any of the company-specific risk be diversified away by investing in both Penske Automotive and Inchcape Plc 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 Inchcape Plc 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 Inchcape plc, you can compare the effects of market volatilities on Penske Automotive and Inchcape Plc 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 Inchcape Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penske Automotive and Inchcape Plc.
Diversification Opportunities for Penske Automotive and Inchcape Plc
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Penske and Inchcape is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Penske Automotive Group and Inchcape plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape plc 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 Inchcape Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape plc has no effect on the direction of Penske Automotive i.e., Penske Automotive and Inchcape Plc go up and down completely randomly.
Pair Corralation between Penske Automotive and Inchcape Plc
Assuming the 90 days horizon Penske Automotive Group is expected to under-perform the Inchcape Plc. In addition to that, Penske Automotive is 1.25 times more volatile than Inchcape plc. It trades about -0.15 of its total potential returns per unit of risk. Inchcape plc is currently generating about 0.11 per unit of volatility. If you would invest 920.00 in Inchcape plc on September 24, 2024 and sell it today you would earn a total of 19.00 from holding Inchcape plc or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penske Automotive Group vs. Inchcape plc
Performance |
| Timeline |
| Penske Automotive |
| Inchcape plc |
Penske Automotive and Inchcape Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penske Automotive and Inchcape Plc
The main advantage of trading using opposite Penske Automotive and Inchcape Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penske Automotive position performs unexpectedly, Inchcape Plc 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 Inchcape Plc will offset losses from the drop in Inchcape Plc's long position.| Penske Automotive vs. Copart Inc | Penske Automotive vs. Zhongsheng Group Holdings | Penske Automotive vs. CarMax Inc | Penske Automotive vs. DIeteren Group SA |
| Inchcape Plc vs. Copart Inc | Inchcape Plc vs. Zhongsheng Group Holdings | Inchcape Plc vs. CarMax Inc | Inchcape Plc vs. DIeteren Group SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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