Correlation Between Park Ohio and Western Copper
Can any of the company-specific risk be diversified away by investing in both Park Ohio and Western Copper 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 Western Copper 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 Western Copper and, you can compare the effects of market volatilities on Park Ohio and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Western Copper.
Diversification Opportunities for Park Ohio and Western Copper
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Park and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Park Ohio i.e., Park Ohio and Western Copper go up and down completely randomly.
Pair Corralation between Park Ohio and Western Copper
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 1.06 times more return on investment than Western Copper. However, Park Ohio is 1.06 times more volatile than Western Copper and. It trades about 0.18 of its potential returns per unit of risk. Western Copper and is currently generating about 0.07 per unit of risk. If you would invest 2,836 in Park Ohio Holdings on September 1, 2024 and sell it today you would earn a total of 381.00 from holding Park Ohio Holdings or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Western Copper and
Performance |
| Timeline |
| Park Ohio Holdings |
| Western Copper |
Park Ohio and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Western Copper
The main advantage of trading using opposite Park Ohio and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper'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 |
| Western Copper vs. NioCorp Developments Ltd | Western Copper vs. Teck Resources Ltd | Western Copper vs. Sigma Lithium Resources | Western Copper vs. MP Materials 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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