Correlation Between Park Electrochemical and CoreCivic
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and CoreCivic 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 CoreCivic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and CoreCivic, you can compare the effects of market volatilities on Park Electrochemical and CoreCivic 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 CoreCivic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and CoreCivic.
Diversification Opportunities for Park Electrochemical and CoreCivic
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Park and CoreCivic is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and CoreCivic go up and down completely randomly.
Pair Corralation between Park Electrochemical and CoreCivic
Considering the 90-day investment horizon Park Electrochemical is expected to generate 8.46 times less return on investment than CoreCivic. But when comparing it to its historical volatility, Park Electrochemical is 4.02 times less risky than CoreCivic. It trades about 0.14 of its potential returns per unit of risk. CoreCivic is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,367 in CoreCivic on August 25, 2024 and sell it today you would earn a total of 832.00 from holding CoreCivic or generate 60.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Park Electrochemical vs. CoreCivic
Performance |
| Timeline |
| Park Electrochemical |
| CoreCivic |
Park Electrochemical and CoreCivic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and CoreCivic
The main advantage of trading using opposite Park Electrochemical and CoreCivic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, CoreCivic 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 CoreCivic will offset losses from the drop in CoreCivic's long position.| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
| CoreCivic vs. Park Electrochemical | CoreCivic vs. Innovative Solutions and | CoreCivic vs. Curtiss Wright | CoreCivic vs. National Presto Industries |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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