Correlation Between Park Electrochemical and Ducommun Incorporated
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and Ducommun Incorporated 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 Ducommun Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Ducommun Incorporated, you can compare the effects of market volatilities on Park Electrochemical and Ducommun Incorporated 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 Ducommun Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Ducommun Incorporated.
Diversification Opportunities for Park Electrochemical and Ducommun Incorporated
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Park and Ducommun is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Ducommun Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducommun Incorporated 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 Ducommun Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducommun Incorporated has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Ducommun Incorporated go up and down completely randomly.
Pair Corralation between Park Electrochemical and Ducommun Incorporated
Considering the 90-day investment horizon Park Electrochemical is expected to generate 1.27 times less return on investment than Ducommun Incorporated. In addition to that, Park Electrochemical is 1.04 times more volatile than Ducommun Incorporated. It trades about 0.08 of its total potential returns per unit of risk. Ducommun Incorporated is currently generating about 0.1 per unit of volatility. If you would invest 6,231 in Ducommun Incorporated on August 23, 2024 and sell it today you would earn a total of 284.00 from holding Ducommun Incorporated or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Electrochemical vs. Ducommun Incorporated
Performance |
| Timeline |
| Park Electrochemical |
| Ducommun Incorporated |
Park Electrochemical and Ducommun Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and Ducommun Incorporated
The main advantage of trading using opposite Park Electrochemical and Ducommun Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, Ducommun Incorporated 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 Ducommun Incorporated will offset losses from the drop in Ducommun Incorporated's long position.| Park Electrochemical vs. Small Cap Core | Park Electrochemical vs. Freedom Holding Corp | Park Electrochemical vs. Gfl Environmental Holdings | Park Electrochemical vs. Growth Fund Of |
| Ducommun Incorporated vs. Small Cap Core | Ducommun Incorporated vs. Freedom Holding Corp | Ducommun Incorporated vs. Gfl Environmental Holdings | Ducommun Incorporated vs. Growth Fund Of |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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