Correlation Between Dillards and PACCAR
Can any of the company-specific risk be diversified away by investing in both Dillards 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 Dillards and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and PACCAR Inc, you can compare the effects of market volatilities on Dillards 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 Dillards with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and PACCAR.
Diversification Opportunities for Dillards and PACCAR
Poor diversification
The 3 months correlation between Dillards and PACCAR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Dillards 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 Dillards 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 Dillards i.e., Dillards and PACCAR go up and down completely randomly.
Pair Corralation between Dillards and PACCAR
Considering the 90-day investment horizon Dillards is expected to generate 2.79 times more return on investment than PACCAR. However, Dillards is 2.79 times more volatile than PACCAR Inc. It trades about 0.02 of its potential returns per unit of risk. PACCAR Inc is currently generating about -0.34 per unit of risk. If you would invest 44,102 in Dillards on January 25, 2024 and sell it today you would earn a total of 175.00 from holding Dillards or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dillards vs. PACCAR Inc
Performance |
| Timeline |
| Dillards |
| PACCAR Inc |
Dillards and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dillards and PACCAR
The main advantage of trading using opposite Dillards and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards 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.| Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer | Dillards vs. Dillards Capital Trust | Dillards vs. Companhia Brasileira de |
| PACCAR vs. Ideanomics | PACCAR vs. American Premium Water | PACCAR vs. Titan International | PACCAR vs. Deere Company |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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