Correlation Between PACCAR and Eva Live

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

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

Diversification Opportunities for PACCAR and Eva Live

0.52

Correlation Coefficient

PACCAR  Eva Live

Very weak diversification

The 3 months correlation between PACCAR and Eva is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Eva Live in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eva Live 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 Eva Live. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eva Live has no effect on the direction of PACCAR i.e., PACCAR and Eva Live go up and down completely randomly.

Pair Corralation between PACCAR and Eva Live

Given the investment horizon of 90 days PACCAR Inc is expected to under-perform the Eva Live. But the stock apears to be less risky and, when comparing its historical volatility, PACCAR Inc is 105.0 times less risky than Eva Live. The stock trades about -0.03 of its potential returns per unit of risk. The Eva Live is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Eva Live on December 19, 2024 and sell it today you would lose (203.00) from holding Eva Live or give up 33.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

PACCAR Inc  vs.  Eva Live

PACCAR Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PACCAR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Eva Live

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eva Live are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Eva Live demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PACCAR and Eva Live

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

The idea behind PACCAR Inc and Eva Live 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.