Correlation Between Park Ohio and CREF Inflation
Can any of the company-specific risk be diversified away by investing in both Park Ohio and CREF Inflation 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 Ohio and CREF Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and CREF Inflation Linked Bond, you can compare the effects of market volatilities on Park Ohio and CREF Inflation 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 Ohio with a short position of CREF Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and CREF Inflation.
Diversification Opportunities for Park Ohio and CREF Inflation
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Park and CREF is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and CREF Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREF Inflation Linked and Park Ohio 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 Ohio Holdings are associated (or correlated) with CREF Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREF Inflation Linked has no effect on the direction of Park Ohio i.e., Park Ohio and CREF Inflation go up and down completely randomly.
Pair Corralation between Park Ohio and CREF Inflation
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 11.4 times more return on investment than CREF Inflation. However, Park Ohio is 11.4 times more volatile than CREF Inflation Linked Bond. It trades about 0.08 of its potential returns per unit of risk. CREF Inflation Linked Bond is currently generating about 0.07 per unit of risk. If you would invest 1,197 in Park Ohio Holdings on September 15, 2024 and sell it today you would earn a total of 1,778 from holding Park Ohio Holdings or generate 148.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Park Ohio Holdings vs. CREF Inflation Linked Bond
Performance |
| Timeline |
| Park Ohio Holdings |
| CREF Inflation Linked |
Park Ohio and CREF Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and CREF Inflation
The main advantage of trading using opposite Park Ohio and CREF Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio position performs unexpectedly, CREF Inflation 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 CREF Inflation will offset losses from the drop in CREF Inflation's long position.| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
| CREF Inflation vs. Park Ohio Holdings | CREF Inflation vs. Parker Hannifin | CREF Inflation vs. MGIC Investment Corp | CREF Inflation vs. Western Asset Investment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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