Correlation Between Globalfoundries and Park Ohio
Can any of the company-specific risk be diversified away by investing in both Globalfoundries and Park Ohio 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 Globalfoundries and Park Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and Park Ohio Holdings, you can compare the effects of market volatilities on Globalfoundries and Park Ohio 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 Globalfoundries with a short position of Park Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Park Ohio.
Diversification Opportunities for Globalfoundries and Park Ohio
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Globalfoundries and Park is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Park Ohio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ohio Holdings and Globalfoundries 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 Globalfoundries are associated (or correlated) with Park Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ohio Holdings has no effect on the direction of Globalfoundries i.e., Globalfoundries and Park Ohio go up and down completely randomly.
Pair Corralation between Globalfoundries and Park Ohio
Considering the 90-day investment horizon Globalfoundries is expected to generate 1.5 times less return on investment than Park Ohio. In addition to that, Globalfoundries is 1.35 times more volatile than Park Ohio Holdings. It trades about 0.07 of its total potential returns per unit of risk. Park Ohio Holdings is currently generating about 0.14 per unit of volatility. If you would invest 2,953 in Park Ohio Holdings on August 30, 2024 and sell it today you would earn a total of 314.00 from holding Park Ohio Holdings or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. Park Ohio Holdings
Performance |
| Timeline |
| Globalfoundries |
| Park Ohio Holdings |
Globalfoundries and Park Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and Park Ohio
The main advantage of trading using opposite Globalfoundries and Park Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, Park Ohio 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 Ohio will offset losses from the drop in Park Ohio's long position.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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