Correlation Between PACCAR and Genpact
Can any of the company-specific risk be diversified away by investing in both PACCAR and Genpact 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 Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Genpact Limited, you can compare the effects of market volatilities on PACCAR and Genpact 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 Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Genpact.
Diversification Opportunities for PACCAR and Genpact
Very good diversification
The 3 months correlation between PACCAR and Genpact is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited 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 Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of PACCAR i.e., PACCAR and Genpact go up and down completely randomly.
Pair Corralation between PACCAR and Genpact
Given the investment horizon of 90 days PACCAR Inc is expected to generate 0.8 times more return on investment than Genpact. However, PACCAR Inc is 1.26 times less risky than Genpact. It trades about 0.44 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.16 per unit of risk. If you would invest 11,137 in PACCAR Inc on December 30, 2023 and sell it today you would earn a total of 1,252 from holding PACCAR Inc or generate 11.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PACCAR Inc vs. Genpact Limited
Performance |
Timeline |
PACCAR Inc |
Genpact Limited |
PACCAR and Genpact Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PACCAR and Genpact
The main advantage of trading using opposite PACCAR and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Genpact 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 Genpact will offset losses from the drop in Genpact's long position.PACCAR vs. Deere Company | PACCAR vs. Manitex International | PACCAR vs. Alamo Group | PACCAR vs. Caterpillar |
Genpact vs. Luxfer Holdings PLC | Genpact vs. Valhi Inc | Genpact vs. Stepan Company | Genpact vs. American Video Teleconferencing |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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