Correlation Between Park National and Li Auto
Can any of the company-specific risk be diversified away by investing in both Park National and Li Auto 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 National and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park National and Li Auto, you can compare the effects of market volatilities on Park National and Li Auto 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 National with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park National and Li Auto.
Diversification Opportunities for Park National and Li Auto
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Park and Li Auto is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Park National and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Park National 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 National are associated (or correlated) with Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of Park National i.e., Park National and Li Auto go up and down completely randomly.
Pair Corralation between Park National and Li Auto
Considering the 90-day investment horizon Park National is expected to generate 1.02 times more return on investment than Li Auto. However, Park National is 1.02 times more volatile than Li Auto. It trades about 0.1 of its potential returns per unit of risk. Li Auto is currently generating about -0.18 per unit of risk. If you would invest 17,755 in Park National on August 30, 2024 and sell it today you would earn a total of 1,463 from holding Park National or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park National vs. Li Auto
Performance |
| Timeline |
| Park National |
| Li Auto |
Park National and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park National and Li Auto
The main advantage of trading using opposite Park National and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park National position performs unexpectedly, Li Auto 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 Li Auto will offset losses from the drop in Li Auto's long position.| Park National vs. Peoples Bancorp | Park National vs. Lakeland Financial | Park National vs. NBT Bancorp | Park National vs. Trustmark |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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