Correlation Between PACCAR and RBACN

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

By analyzing existing cross correlation between PACCAR Inc and RBACN 775 15 MAR 31, you can compare the effects of market volatilities on PACCAR and RBACN 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 RBACN. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and RBACN.

Diversification Opportunities for PACCAR and RBACN

-0.22

Correlation Coefficient

PACCAR  RBACN

Very good diversification

The 3 months correlation between PACCAR and RBACN is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and RBACN 775 15 MAR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBACN 775 15 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 RBACN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBACN 775 15 has no effect on the direction of PACCAR i.e., PACCAR and RBACN go up and down completely randomly.

Pair Corralation between PACCAR and RBACN

Given the investment horizon of 90 days PACCAR Inc is expected to generate 7.38 times more return on investment than RBACN. However, PACCAR is 7.38 times more volatile than RBACN 775 15 MAR 31. It trades about 0.04 of its potential returns per unit of risk. RBACN 775 15 MAR 31 is currently generating about -0.08 per unit of risk. If you would invest  9,985  in PACCAR Inc on October 5, 2024 and sell it today you would earn a total of  357.00  from holding PACCAR Inc or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

PACCAR Inc  vs.  RBACN 775 15 MAR 31

PACCAR Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 3 (%) 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.

RBACN 775 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBACN 775 15 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RBACN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PACCAR and RBACN

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

The idea behind PACCAR Inc and RBACN 775 15 MAR 31 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.