Correlation Between Gorman Rupp and Park Ohio
Can any of the company-specific risk be diversified away by investing in both Gorman Rupp 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 Gorman Rupp and Park Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gorman Rupp and Park Ohio Holdings, you can compare the effects of market volatilities on Gorman Rupp 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 Gorman Rupp with a short position of Park Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gorman Rupp and Park Ohio.
Diversification Opportunities for Gorman Rupp and Park Ohio
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gorman and Park is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Gorman Rupp 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 Gorman Rupp 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 Gorman Rupp 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 Gorman Rupp i.e., Gorman Rupp and Park Ohio go up and down completely randomly.
Pair Corralation between Gorman Rupp and Park Ohio
Considering the 90-day investment horizon Gorman Rupp is expected to generate 1.09 times less return on investment than Park Ohio. But when comparing it to its historical volatility, Gorman Rupp is 1.62 times less risky than Park Ohio. It trades about 0.27 of its potential returns per unit of risk. Park Ohio Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,838 in Park Ohio Holdings on September 3, 2024 and sell it today you would earn a total of 379.00 from holding Park Ohio Holdings or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gorman Rupp vs. Park Ohio Holdings
Performance |
| Timeline |
| Gorman Rupp |
| Park Ohio Holdings |
Gorman Rupp and Park Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gorman Rupp and Park Ohio
The main advantage of trading using opposite Gorman Rupp and Park Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gorman Rupp 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.| Gorman Rupp vs. Standex International | Gorman Rupp vs. Franklin Electric Co | Gorman Rupp vs. Omega Flex | Gorman Rupp vs. China Yuchai International |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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