Correlation Between Eve Holding and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Eve Holding and Park Electrochemical 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 Eve Holding and Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and Park Electrochemical, you can compare the effects of market volatilities on Eve Holding and Park Electrochemical 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 Eve Holding with a short position of Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and Park Electrochemical.
Diversification Opportunities for Eve Holding and Park Electrochemical
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eve and Park is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and Eve Holding 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 Eve Holding are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Eve Holding i.e., Eve Holding and Park Electrochemical go up and down completely randomly.
Pair Corralation between Eve Holding and Park Electrochemical
Given the investment horizon of 90 days Eve Holding is expected to under-perform the Park Electrochemical. In addition to that, Eve Holding is 1.72 times more volatile than Park Electrochemical. It trades about -0.01 of its total potential returns per unit of risk. Park Electrochemical is currently generating about 0.1 per unit of volatility. If you would invest 1,439 in Park Electrochemical on August 24, 2024 and sell it today you would earn a total of 64.00 from holding Park Electrochemical or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eve Holding vs. Park Electrochemical
Performance |
| Timeline |
| Eve Holding |
| Park Electrochemical |
Eve Holding and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and Park Electrochemical
The main advantage of trading using opposite Eve Holding and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| Eve Holding vs. Coca Cola Consolidated | Eve Holding vs. Koppers Holdings | Eve Holding vs. Coca Cola Femsa SAB | Eve Holding vs. Know Labs |
| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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