Correlation Between Gaming and Park Aerospace

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

By analyzing existing cross correlation between Gaming and Leisure and Park Aerospace Corp, you can compare the effects of market volatilities on Gaming and Park Aerospace 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 Gaming with a short position of Park Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and Park Aerospace.

Diversification Opportunities for Gaming and Park Aerospace

0.01

Correlation Coefficient

Gaming  Park Aerospace

Significant diversification

The 3 months correlation between Gaming and Park is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and Park Aerospace Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Aerospace Corp and Gaming 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 Gaming and Leisure are associated (or correlated) with Park Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Aerospace Corp has no effect on the direction of Gaming i.e., Gaming and Park Aerospace go up and down completely randomly.

Pair Corralation between Gaming and Park Aerospace

Assuming the 90 days horizon Gaming and Leisure is expected to generate 0.73 times more return on investment than Park Aerospace. However, Gaming and Leisure is 1.37 times less risky than Park Aerospace. It trades about 0.05 of its potential returns per unit of risk. Park Aerospace Corp is currently generating about -0.09 per unit of risk. If you would invest  4,383  in Gaming and Leisure on December 20, 2024 and sell it today you would earn a total of  157.00  from holding Gaming and Leisure or generate 3.58% return on investment over 90 days.

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

Gaming and Leisure  vs.  Park Aerospace Corp

Gaming and Leisure

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming and Leisure are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaming is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Park Aerospace Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Aerospace Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gaming and Park Aerospace

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

The idea behind Gaming and Leisure and Park Aerospace Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.