Correlation Between PACCAR and Definitive Healthcare
Can any of the company-specific risk be diversified away by investing in both PACCAR and Definitive Healthcare 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 Definitive Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Definitive Healthcare Corp, you can compare the effects of market volatilities on PACCAR and Definitive Healthcare 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 Definitive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Definitive Healthcare.
Diversification Opportunities for PACCAR and Definitive Healthcare
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PACCAR and Definitive is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare 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 Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of PACCAR i.e., PACCAR and Definitive Healthcare go up and down completely randomly.
Pair Corralation between PACCAR and Definitive Healthcare
Given the investment horizon of 90 days PACCAR is expected to generate 6.3 times less return on investment than Definitive Healthcare. But when comparing it to its historical volatility, PACCAR Inc is 3.18 times less risky than Definitive Healthcare. It trades about 0.09 of its potential returns per unit of risk. Definitive Healthcare Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 251.00 in Definitive Healthcare Corp on April 19, 2025 and sell it today you would earn a total of 151.00 from holding Definitive Healthcare Corp or generate 60.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. Definitive Healthcare Corp
Performance |
| Timeline |
| PACCAR Inc |
| Definitive Healthcare |
PACCAR and Definitive Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Definitive Healthcare
The main advantage of trading using opposite PACCAR and Definitive Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR position performs unexpectedly, Definitive Healthcare 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 Definitive Healthcare will offset losses from the drop in Definitive Healthcare's long position.The idea behind PACCAR Inc and Definitive Healthcare Corp 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.| Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Certara | Definitive Healthcare vs. Health Catalyst | Definitive Healthcare vs. HealthStream |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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