Correlation Between Parke Bancorp and Global Water
Can any of the company-specific risk be diversified away by investing in both Parke Bancorp and Global Water 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 Parke Bancorp and Global Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parke Bancorp and Global Water Resources, you can compare the effects of market volatilities on Parke Bancorp and Global Water 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 Parke Bancorp with a short position of Global Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parke Bancorp and Global Water.
Diversification Opportunities for Parke Bancorp and Global Water
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parke and Global is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp and Global Water Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Water Resources and Parke Bancorp 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 Parke Bancorp are associated (or correlated) with Global Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Water Resources has no effect on the direction of Parke Bancorp i.e., Parke Bancorp and Global Water go up and down completely randomly.
Pair Corralation between Parke Bancorp and Global Water
Given the investment horizon of 90 days Parke Bancorp is expected to generate 1.06 times more return on investment than Global Water. However, Parke Bancorp is 1.06 times more volatile than Global Water Resources. It trades about 0.06 of its potential returns per unit of risk. Global Water Resources is currently generating about 0.03 per unit of risk. If you would invest 1,806 in Parke Bancorp on August 27, 2024 and sell it today you would earn a total of 549.00 from holding Parke Bancorp or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parke Bancorp vs. Global Water Resources
Performance |
| Timeline |
| Parke Bancorp |
| Global Water Resources |
Parke Bancorp and Global Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parke Bancorp and Global Water
The main advantage of trading using opposite Parke Bancorp and Global Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parke Bancorp position performs unexpectedly, Global Water 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 Global Water will offset losses from the drop in Global Water's long position.| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
| Global Water vs. Middlesex Water | Global Water vs. California Water Service | Global Water vs. American States Water | Global Water vs. Artesian Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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