Correlation Between PARKEN Sport and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on PARKEN Sport and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and FLOW TRADERS.
Diversification Opportunities for PARKEN Sport and FLOW TRADERS
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PARKEN and FLOW is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and FLOW TRADERS go up and down completely randomly.
Pair Corralation between PARKEN Sport and FLOW TRADERS
Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 4.08 times more return on investment than FLOW TRADERS. However, PARKEN Sport is 4.08 times more volatile than FLOW TRADERS LTD. It trades about 0.07 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.08 per unit of risk. If you would invest 690.00 in PARKEN Sport Entertainment on November 3, 2024 and sell it today you would earn a total of 1,065 from holding PARKEN Sport Entertainment or generate 154.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. FLOW TRADERS LTD
Performance |
| Timeline |
| PARKEN Sport Enterta |
| FLOW TRADERS LTD |
PARKEN Sport and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and FLOW TRADERS
The main advantage of trading using opposite PARKEN Sport and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| PARKEN Sport vs. United Utilities Group | PARKEN Sport vs. Minerals Technologies | PARKEN Sport vs. Kingdee International Software | PARKEN Sport vs. BioNTech SE |
| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Charles Schwab | FLOW TRADERS vs. The Goldman Sachs |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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