Correlation Between PARKEN Sport and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport and Ashtead Group 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 PARKEN Sport and Ashtead Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and Ashtead Group plc, you can compare the effects of market volatilities on PARKEN Sport and Ashtead Group 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 PARKEN Sport with a short position of Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and Ashtead Group.
Diversification Opportunities for PARKEN Sport and Ashtead Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PARKEN and Ashtead is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc and PARKEN Sport 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 PARKEN Sport Entertainment are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and Ashtead Group go up and down completely randomly.
Pair Corralation between PARKEN Sport and Ashtead Group
Assuming the 90 days horizon PARKEN Sport is expected to generate 8.59 times less return on investment than Ashtead Group. In addition to that, PARKEN Sport is 1.02 times more volatile than Ashtead Group plc. It trades about 0.02 of its total potential returns per unit of risk. Ashtead Group plc is currently generating about 0.21 per unit of volatility. If you would invest 6,950 in Ashtead Group plc on September 5, 2024 and sell it today you would earn a total of 550.00 from holding Ashtead Group plc or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. Ashtead Group plc
Performance |
| Timeline |
| PARKEN Sport Enterta |
| Ashtead Group plc |
PARKEN Sport and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and Ashtead Group
The main advantage of trading using opposite PARKEN Sport and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| PARKEN Sport vs. Choice Hotels International | PARKEN Sport vs. SOUTHWEST AIRLINES | PARKEN Sport vs. DALATA HOTEL | PARKEN Sport vs. Playa Hotels Resorts |
| Ashtead Group vs. PARKEN Sport Entertainment | Ashtead Group vs. Tencent Music Entertainment | Ashtead Group vs. GEELY AUTOMOBILE | Ashtead Group vs. RCS MediaGroup SpA |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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