Correlation Between Parkland Fuel and Royal Canadian
Can any of the company-specific risk be diversified away by investing in both Parkland Fuel and Royal Canadian 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 Parkland Fuel and Royal Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parkland Fuel and Royal Canadian Mint, you can compare the effects of market volatilities on Parkland Fuel and Royal Canadian 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 Parkland Fuel with a short position of Royal Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkland Fuel and Royal Canadian.
Diversification Opportunities for Parkland Fuel and Royal Canadian
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parkland and Royal is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Parkland Fuel and Royal Canadian Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Canadian Mint and Parkland Fuel 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 Parkland Fuel are associated (or correlated) with Royal Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Canadian Mint has no effect on the direction of Parkland Fuel i.e., Parkland Fuel and Royal Canadian go up and down completely randomly.
Pair Corralation between Parkland Fuel and Royal Canadian
Assuming the 90 days trading horizon Parkland Fuel is expected to generate 1.3 times more return on investment than Royal Canadian. However, Parkland Fuel is 1.3 times more volatile than Royal Canadian Mint. It trades about 0.01 of its potential returns per unit of risk. Royal Canadian Mint is currently generating about -0.39 per unit of risk. If you would invest 3,439 in Parkland Fuel on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Parkland Fuel or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parkland Fuel vs. Royal Canadian Mint
Performance |
| Timeline |
| Parkland Fuel |
| Royal Canadian Mint |
Parkland Fuel and Royal Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parkland Fuel and Royal Canadian
The main advantage of trading using opposite Parkland Fuel and Royal Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkland Fuel position performs unexpectedly, Royal Canadian 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 Royal Canadian will offset losses from the drop in Royal Canadian's long position.| Parkland Fuel vs. Keyera Corp | Parkland Fuel vs. Gibson Energy | Parkland Fuel vs. TFI International | Parkland Fuel vs. Pembina Pipeline Corp |
| Royal Canadian vs. Saputo Inc | Royal Canadian vs. CCL Industries | Royal Canadian vs. Thomson Reuters Corp | Royal Canadian vs. George Weston Limited |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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