Correlation Between Ideanomics and PACCAR

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

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

Diversification Opportunities for Ideanomics and PACCAR

-0.03

Correlation Coefficient

Ideanomics  PACCAR

Good diversification

The 3 months correlation between Ideanomics and PACCAR is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ideanomics and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Ideanomics 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 Ideanomics 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 Ideanomics i.e., Ideanomics and PACCAR go up and down completely randomly.

Pair Corralation between Ideanomics and PACCAR

Given the investment horizon of 90 days Ideanomics is expected to generate 101.43 times more return on investment than PACCAR. However, Ideanomics is 101.43 times more volatile than PACCAR Inc. It trades about 0.25 of its potential returns per unit of risk. PACCAR Inc is currently generating about -0.37 per unit of risk. If you would invest  7.00  in Ideanomics on October 6, 2024 and sell it today you would lose (2.00) from holding Ideanomics or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ideanomics  vs.  PACCAR Inc

Ideanomics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

PACCAR Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PACCAR is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ideanomics and PACCAR

The main advantage of trading using opposite Ideanomics and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ideanomics 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 Ideanomics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.