Correlation Between Big 5 and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both Big 5 and PARKEN Sport 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 Big 5 and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and PARKEN Sport Entertainment, you can compare the effects of market volatilities on Big 5 and PARKEN Sport 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 Big 5 with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and PARKEN Sport.
Diversification Opportunities for Big 5 and PARKEN Sport
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and PARKEN is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and Big 5 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 Big 5 Sporting are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of Big 5 i.e., Big 5 and PARKEN Sport go up and down completely randomly.
Pair Corralation between Big 5 and PARKEN Sport
Assuming the 90 days horizon Big 5 Sporting is expected to under-perform the PARKEN Sport. In addition to that, Big 5 is 3.2 times more volatile than PARKEN Sport Entertainment. It trades about -0.11 of its total potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.01 per unit of volatility. If you would invest 1,615 in PARKEN Sport Entertainment on August 29, 2024 and sell it today you would earn a total of 0.00 from holding PARKEN Sport Entertainment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| Big 5 Sporting |
| PARKEN Sport Enterta |
Big 5 and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and PARKEN Sport
The main advantage of trading using opposite Big 5 and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.The idea behind Big 5 Sporting and PARKEN Sport Entertainment 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.| PARKEN Sport vs. The Walt Disney | PARKEN Sport vs. Superior Plus Corp | PARKEN Sport vs. NMI Holdings | PARKEN Sport vs. Origin Agritech |
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.
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