Correlation Between PACCAR and Artisan Partners

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

By analyzing existing cross correlation between PACCAR Inc and Artisan Partners Asset, you can compare the effects of market volatilities on PACCAR and Artisan Partners 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 Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Artisan Partners.

Diversification Opportunities for PACCAR and Artisan Partners

0.95

Correlation Coefficient

PACCAR  Artisan Partners

Almost no diversification

The 3 months correlation between PACCAR and Artisan is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of PACCAR i.e., PACCAR and Artisan Partners go up and down completely randomly.

Pair Corralation between PACCAR and Artisan Partners

Given the investment horizon of 90 days PACCAR Inc is expected to generate 0.98 times more return on investment than Artisan Partners. However, PACCAR Inc is 1.02 times less risky than Artisan Partners. It trades about 0.19 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about 0.17 per unit of risk. If you would invest  9,488  in PACCAR Inc on September 13, 2024 and sell it today you would earn a total of  2,097  from holding PACCAR Inc or generate 22.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

PACCAR Inc  vs.  Artisan Partners Asset

PACCAR Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, PACCAR reported solid returns over the last few months and may actually be approaching a breakup point.

Artisan Partners Asset

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Artisan Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PACCAR and Artisan Partners

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

The idea behind PACCAR Inc and Artisan Partners Asset 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..