Correlation Between Getlink SE and PACCAR

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

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

Diversification Opportunities for Getlink SE and PACCAR

-0.25

Correlation Coefficient

Getlink SE  PACCAR

Very good diversification

The 3 months correlation between Getlink and PACCAR is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Getlink SE and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Getlink SE 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 Getlink SE 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 Getlink SE i.e., Getlink SE and PACCAR go up and down completely randomly.

Pair Corralation between Getlink SE and PACCAR

Assuming the 90 days horizon Getlink SE is expected to generate 0.6 times more return on investment than PACCAR. However, Getlink SE is 1.66 times less risky than PACCAR. It trades about -0.26 of its potential returns per unit of risk. PACCAR Inc is currently generating about -0.41 per unit of risk. If you would invest  1,705  in Getlink SE on January 24, 2024 and sell it today you would lose (60.00) from holding Getlink SE or give up 3.52% of portfolio value over 90 days.

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

Getlink SE  vs.  PACCAR Inc

Getlink SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getlink SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PACCAR Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, PACCAR may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Getlink SE and PACCAR

The main advantage of trading using opposite Getlink SE and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getlink SE 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 Getlink SE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.