Correlation Between PACCAR and CeriBell,

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

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

Diversification Opportunities for PACCAR and CeriBell,

0.65

Correlation Coefficient

PACCAR  CeriBell,

Poor diversification

The 3 months correlation between PACCAR and CeriBell, is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and CeriBell, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeriBell, and PACCAR 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 PACCAR Inc are associated (or correlated) with CeriBell,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeriBell, has no effect on the direction of PACCAR i.e., PACCAR and CeriBell, go up and down completely randomly.

Pair Corralation between PACCAR and CeriBell,

Given the investment horizon of 90 days PACCAR Inc is expected to generate 0.55 times more return on investment than CeriBell,. However, PACCAR Inc is 1.81 times less risky than CeriBell,. It trades about -0.11 of its potential returns per unit of risk. CeriBell, is currently generating about -0.48 per unit of risk. If you would invest  11,215  in PACCAR Inc on October 11, 2024 and sell it today you would lose (365.00) from holding PACCAR Inc or give up 3.25% of portfolio value over 90 days.

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

PACCAR Inc  vs.  CeriBell,

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.

CeriBell,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CeriBell, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, CeriBell, is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PACCAR and CeriBell,

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

The idea behind PACCAR Inc and CeriBell, 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.