Correlation Between Park Electrochemical and Alabama Aircraft
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and Alabama Aircraft 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 Park Electrochemical and Alabama Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Alabama Aircraft Industries, you can compare the effects of market volatilities on Park Electrochemical and Alabama Aircraft 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 Park Electrochemical with a short position of Alabama Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Alabama Aircraft.
Diversification Opportunities for Park Electrochemical and Alabama Aircraft
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Park and Alabama is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Alabama Aircraft Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alabama Aircraft Ind and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with Alabama Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alabama Aircraft Ind has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Alabama Aircraft go up and down completely randomly.
Pair Corralation between Park Electrochemical and Alabama Aircraft
If you would invest 1,312 in Park Electrochemical on August 25, 2024 and sell it today you would earn a total of 199.00 from holding Park Electrochemical or generate 15.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.22% |
| Values | Daily Returns |
Park Electrochemical vs. Alabama Aircraft Industries
Performance |
| Timeline |
| Park Electrochemical |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Park Electrochemical and Alabama Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and Alabama Aircraft
The main advantage of trading using opposite Park Electrochemical and Alabama Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, Alabama Aircraft 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 Alabama Aircraft will offset losses from the drop in Alabama Aircraft's long position.| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
| Alabama Aircraft vs. World Houseware Limited | Alabama Aircraft vs. Newell Brands | Alabama Aircraft vs. RBC Bearings Incorporated | Alabama Aircraft vs. Dave Busters Entertainment |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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