Correlation Between Triumph and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Triumph and Park Electrochemical 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 Triumph and Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Group and Park Electrochemical, you can compare the effects of market volatilities on Triumph and Park Electrochemical 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 Triumph with a short position of Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph and Park Electrochemical.
Diversification Opportunities for Triumph and Park Electrochemical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Triumph and Park is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and Triumph 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 Triumph Group are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Triumph i.e., Triumph and Park Electrochemical go up and down completely randomly.
Pair Corralation between Triumph and Park Electrochemical
Considering the 90-day investment horizon Triumph Group is expected to generate 2.0 times more return on investment than Park Electrochemical. However, Triumph is 2.0 times more volatile than Park Electrochemical. It trades about 0.28 of its potential returns per unit of risk. Park Electrochemical is currently generating about 0.17 per unit of risk. If you would invest 1,490 in Triumph Group on August 28, 2024 and sell it today you would earn a total of 405.00 from holding Triumph Group or generate 27.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Group vs. Park Electrochemical
Performance |
| Timeline |
| Triumph Group |
| Park Electrochemical |
Triumph and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph and Park Electrochemical
The main advantage of trading using opposite Triumph and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| Triumph vs. Mercury Systems | Triumph vs. Curtiss Wright | Triumph vs. Hexcel | Triumph vs. Ducommun Incorporated |
| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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