Correlation Between PACCAR and Dillards
Can any of the company-specific risk be diversified away by investing in both PACCAR and Dillards 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 Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Dillards, you can compare the effects of market volatilities on PACCAR and Dillards 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 Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Dillards.
Diversification Opportunities for PACCAR and Dillards
Poor diversification
The 3 months correlation between PACCAR and Dillards is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of PACCAR i.e., PACCAR and Dillards go up and down completely randomly.
Pair Corralation between PACCAR and Dillards
Given the investment horizon of 90 days PACCAR Inc is expected to under-perform the Dillards. But the stock apears to be less risky and, when comparing its historical volatility, PACCAR Inc is 2.82 times less risky than Dillards. The stock trades about -0.43 of its potential returns per unit of risk. The Dillards is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 45,805 in Dillards on January 27, 2024 and sell it today you would lose (908.00) from holding Dillards or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. Dillards
Performance |
| Timeline |
| PACCAR Inc |
| Dillards |
PACCAR and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Dillards
The main advantage of trading using opposite PACCAR and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.| PACCAR vs. Astec Industries | PACCAR vs. Manitex International | PACCAR vs. Alamo Group | PACCAR vs. Columbus McKinnon |
| Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer | Dillards vs. Dillards Capital Trust | Dillards vs. Companhia Brasileira de |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |