Correlation Between Ferrari NV and Parks America
Can any of the company-specific risk be diversified away by investing in both Ferrari NV and Parks America 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 Ferrari NV and Parks America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrari NV and Parks America, you can compare the effects of market volatilities on Ferrari NV and Parks America 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 Ferrari NV with a short position of Parks America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrari NV and Parks America.
Diversification Opportunities for Ferrari NV and Parks America
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ferrari and Parks is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ferrari NV and Parks America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parks America and Ferrari NV 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 Ferrari NV are associated (or correlated) with Parks America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parks America has no effect on the direction of Ferrari NV i.e., Ferrari NV and Parks America go up and down completely randomly.
Pair Corralation between Ferrari NV and Parks America
Given the investment horizon of 90 days Ferrari NV is expected to under-perform the Parks America. But the stock apears to be less risky and, when comparing its historical volatility, Ferrari NV is 2.77 times less risky than Parks America. The stock trades about -0.21 of its potential returns per unit of risk. The Parks America is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Parks America on September 2, 2024 and sell it today you would lose (3.00) from holding Parks America or give up 6.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrari NV vs. Parks America
Performance |
| Timeline |
| Ferrari NV |
| Parks America |
Ferrari NV and Parks America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrari NV and Parks America
The main advantage of trading using opposite Ferrari NV and Parks America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrari NV position performs unexpectedly, Parks America 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 Parks America will offset losses from the drop in Parks America's long position.| Ferrari NV vs. Volkswagen AG Pref | Ferrari NV vs. Volkswagen AG 110 | Ferrari NV vs. Porsche Automobil Holding | Ferrari NV vs. Bayerische Motoren Werke |
| Parks America vs. Porsche Automobile Holding | Parks America vs. Ferrari NV | Parks America vs. Toyota Motor | Parks America vs. General Motors |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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