Correlation Between PACCAR and Lincoln National

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both PACCAR and Lincoln National 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 Lincoln National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Lincoln National, you can compare the effects of market volatilities on PACCAR and Lincoln National 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 Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Lincoln National.

Diversification Opportunities for PACCAR and Lincoln National

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between PACCAR and Lincoln is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of PACCAR i.e., PACCAR and Lincoln National go up and down completely randomly.

Pair Corralation between PACCAR and Lincoln National

Given the investment horizon of 90 days PACCAR Inc is expected to under-perform the Lincoln National. In addition to that, PACCAR is 1.85 times more volatile than Lincoln National. It trades about -0.16 of its total potential returns per unit of risk. Lincoln National is currently generating about 0.01 per unit of volatility. If you would invest  2,780  in Lincoln National on October 9, 2024 and sell it today you would earn a total of  2.00  from holding Lincoln National or generate 0.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PACCAR Inc  vs.  Lincoln National

 Performance 
       Timeline  
PACCAR Inc 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 5 (%) 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.
Lincoln National 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lincoln National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lincoln National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PACCAR and Lincoln National Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PACCAR and Lincoln National

The main advantage of trading using opposite PACCAR and Lincoln National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Lincoln National 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 Lincoln National will offset losses from the drop in Lincoln National's long position.
The idea behind PACCAR Inc and Lincoln National 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing