Correlation Between Park Ohio and SNDL
Can any of the company-specific risk be diversified away by investing in both Park Ohio 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 Ohio and SNDL 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 SNDL Inc, you can compare the effects of market volatilities on Park Ohio 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 Ohio with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and SNDL.
Diversification Opportunities for Park Ohio and SNDL
Poor diversification
The 3 months correlation between Park and SNDL is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 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 Ohio i.e., Park Ohio and SNDL go up and down completely randomly.
Pair Corralation between Park Ohio and SNDL
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 0.63 times more return on investment than SNDL. However, Park Ohio Holdings is 1.59 times less risky than SNDL. It trades about -0.02 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.07 per unit of risk. If you would invest 2,469 in Park Ohio Holdings on November 28, 2024 and sell it today you would lose (36.00) from holding Park Ohio Holdings or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. SNDL Inc
Performance |
| Timeline |
| Park Ohio Holdings |
| SNDL Inc |
Park Ohio and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and SNDL
The main advantage of trading using opposite Park Ohio and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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 Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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