Correlation Between ATHENE and PACCAR

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

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

Diversification Opportunities for ATHENE and PACCAR

-0.09

Correlation Coefficient

ATHENE  PACCAR

Good diversification

The 3 months correlation between ATHENE and PACCAR is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ATHENE HLDG LTD and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and ATHENE 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 ATHENE HLDG LTD are associated (or correlated) with PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of ATHENE i.e., ATHENE and PACCAR go up and down completely randomly.

Pair Corralation between ATHENE and PACCAR

Assuming the 90 days trading horizon ATHENE HLDG LTD is expected to under-perform the PACCAR. But the bond apears to be less risky and, when comparing its historical volatility, ATHENE HLDG LTD is 3.93 times less risky than PACCAR. The bond trades about -0.29 of its potential returns per unit of risk. The PACCAR Inc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  11,163  in PACCAR Inc on October 10, 2024 and sell it today you would lose (207.00) from holding PACCAR Inc or give up 1.85% of portfolio value over 90 days.

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

ATHENE HLDG LTD  vs.  PACCAR Inc

ATHENE HLDG LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

PACCAR Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 6 (%) 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.

Pair Trading with ATHENE and PACCAR

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

The idea behind ATHENE HLDG LTD and PACCAR Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.