Correlation Between Sportsmans Warehouse and PARKEN Sport

Can any of the company-specific risk be diversified away by investing in both Sportsmans Warehouse and PARKEN Sport 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 Sportsmans Warehouse and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sportsmans Warehouse Holdings and PARKEN Sport Entertainment, you can compare the effects of market volatilities on Sportsmans Warehouse and PARKEN Sport 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 Sportsmans Warehouse with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsmans Warehouse and PARKEN Sport.

Diversification Opportunities for Sportsmans Warehouse and PARKEN Sport

-0.39

Correlation Coefficient

Sportsmans Warehouse  PARKEN Sport

Very good diversification

The 3 months correlation between Sportsmans and PARKEN is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sportsmans Warehouse Holdings and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and Sportsmans Warehouse 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 Sportsmans Warehouse Holdings are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of Sportsmans Warehouse i.e., Sportsmans Warehouse and PARKEN Sport go up and down completely randomly.

Pair Corralation between Sportsmans Warehouse and PARKEN Sport

Assuming the 90 days horizon Sportsmans Warehouse is expected to generate 13.63 times less return on investment than PARKEN Sport. In addition to that, Sportsmans Warehouse is 2.1 times more volatile than PARKEN Sport Entertainment. It trades about 0.0 of its total potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.08 per unit of volatility. If you would invest  1,515  in PARKEN Sport Entertainment on September 14, 2024 and sell it today you would earn a total of  160.00  from holding PARKEN Sport Entertainment or generate 10.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sportsmans Warehouse Holdings  vs.  PARKEN Sport Entertainment

Sportsmans Warehouse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportsmans Warehouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sportsmans Warehouse is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PARKEN Sport Enterta

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARKEN Sport may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sportsmans Warehouse and PARKEN Sport

The main advantage of trading using opposite Sportsmans Warehouse and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sportsmans Warehouse position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.

The idea behind Sportsmans Warehouse Holdings and PARKEN Sport Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.