Correlation Between QUEEN S and Penske Automotive

Can any of the company-specific risk be diversified away by investing in both QUEEN S and Penske Automotive 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 QUEEN S and Penske Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QUEEN S ROAD and Penske Automotive Group, you can compare the effects of market volatilities on QUEEN S and Penske Automotive 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 QUEEN S with a short position of Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUEEN S and Penske Automotive.

Diversification Opportunities for QUEEN S and Penske Automotive

0.46

Correlation Coefficient

QUEEN S  Penske Automotive

Very weak diversification

The 3 months correlation between QUEEN and Penske is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding QUEEN S ROAD and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and QUEEN S 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 QUEEN S ROAD are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of QUEEN S i.e., QUEEN S and Penske Automotive go up and down completely randomly.

Pair Corralation between QUEEN S and Penske Automotive

Assuming the 90 days horizon QUEEN S ROAD is expected to under-perform the Penske Automotive. In addition to that, QUEEN S is 1.22 times more volatile than Penske Automotive Group. It trades about -0.15 of its total potential returns per unit of risk. Penske Automotive Group is currently generating about -0.01 per unit of volatility. If you would invest  14,592  in Penske Automotive Group on December 28, 2024 and sell it today you would lose (392.00) from holding Penske Automotive Group or give up 2.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.71%
Values	Daily Returns

QUEEN S ROAD  vs.  Penske Automotive Group

QUEEN S ROAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days QUEEN S ROAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Penske Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penske Automotive Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Penske Automotive is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with QUEEN S and Penske Automotive

The main advantage of trading using opposite QUEEN S and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QUEEN S position performs unexpectedly, Penske Automotive 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 Penske Automotive will offset losses from the drop in Penske Automotive's long position.

The idea behind QUEEN S ROAD and Penske Automotive Group 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.