Correlation Between Park Electrochemical and SNDL
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and SNDL 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 SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and SNDL Inc, you can compare the effects of market volatilities on Park Electrochemical and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and SNDL.
Diversification Opportunities for Park Electrochemical and SNDL
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and SNDL is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and SNDL go up and down completely randomly.
Pair Corralation between Park Electrochemical and SNDL
Considering the 90-day investment horizon Park Electrochemical is expected to generate 1.0 times more return on investment than SNDL. However, Park Electrochemical is 1.0 times more volatile than SNDL Inc. It trades about 0.05 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.32 per unit of risk. If you would invest 1,487 in Park Electrochemical on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Park Electrochemical or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Electrochemical vs. SNDL Inc
Performance |
| Timeline |
| Park Electrochemical |
| SNDL Inc |
Park Electrochemical and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and SNDL
The main advantage of trading using opposite Park Electrochemical and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| Park Electrochemical vs. Novocure | Park Electrochemical vs. HubSpot | Park Electrochemical vs. DigitalOcean Holdings | Park Electrochemical vs. Appian Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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