Correlation Between Penske Automotive and Penske Automotive

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

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

Diversification Opportunities for Penske Automotive and Penske Automotive

0.0

Correlation Coefficient

Penske Automotive  Penske Automotive

Pay attention - limited upside

The 3 months correlation between Penske and Penske is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Penske Automotive Group and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and Penske Automotive 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 Penske Automotive Group are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of Penske Automotive i.e., Penske Automotive and Penske Automotive go up and down completely randomly.

Pair Corralation between Penske Automotive and Penske Automotive

If you would invest  14,187  in Penske Automotive Group on October 7, 2024 and sell it today you would earn a total of  313.00  from holding Penske Automotive Group or generate 2.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Penske Automotive Group  vs.  Penske Automotive Group

Penske Automotive

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penske Automotive Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Penske Automotive is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Penske Automotive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penske Automotive Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Penske Automotive is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Penske Automotive and Penske Automotive

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

The idea behind Penske Automotive Group and Penske Automotive Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.