Correlation Between Getty Copper and PACCAR

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

By analyzing existing cross correlation between Getty Copper and PACCAR Inc, you can compare the effects of market volatilities on Getty Copper 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 Getty Copper with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getty Copper and PACCAR.

Diversification Opportunities for Getty Copper and PACCAR

0.0

Correlation Coefficient

Getty Copper  PACCAR

Pay attention - limited upside

The 3 months correlation between Getty and PACCAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Getty Copper and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Getty Copper 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 Getty Copper 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 Getty Copper i.e., Getty Copper and PACCAR go up and down completely randomly.

Pair Corralation between Getty Copper and PACCAR

Assuming the 90 days horizon Getty Copper is expected to generate 4.72 times more return on investment than PACCAR. However, Getty Copper is 4.72 times more volatile than PACCAR Inc. It trades about 0.06 of its potential returns per unit of risk. PACCAR Inc is currently generating about 0.07 per unit of risk. If you would invest  1.34  in Getty Copper on October 25, 2024 and sell it today you would earn a total of  3.54  from holding Getty Copper or generate 264.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Getty Copper  vs.  PACCAR Inc

Getty Copper

Risk-Adjusted Performance

0 of 100

Very Weak

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

PACCAR Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, PACCAR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Getty Copper and PACCAR

The main advantage of trading using opposite Getty Copper and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Copper 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.

The idea behind Getty Copper and PACCAR Inc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.