Correlation Between Arhaus and Parks America

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

By analyzing existing cross correlation between Arhaus Inc and Parks America, you can compare the effects of market volatilities on Arhaus 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 Arhaus with a short position of Parks America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and Parks America.

Diversification Opportunities for Arhaus and Parks America

-0.39

Correlation Coefficient

Arhaus  Parks America

Very good diversification

The 3 months correlation between Arhaus and Parks is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Parks America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parks America and Arhaus 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 Arhaus Inc 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 Arhaus i.e., Arhaus and Parks America go up and down completely randomly.

Pair Corralation between Arhaus and Parks America

Given the investment horizon of 90 days Arhaus Inc is expected to generate 0.77 times more return on investment than Parks America. However, Arhaus Inc is 1.29 times less risky than Parks America. It trades about 0.17 of its potential returns per unit of risk. Parks America is currently generating about 0.09 per unit of risk. If you would invest  940.00  in Arhaus Inc on September 16, 2024 and sell it today you would earn a total of  115.00  from holding Arhaus Inc or generate 12.23% return on investment over 90 days.

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

Arhaus Inc  vs.  Parks America

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Parks America

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parks America are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking signals, Parks America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arhaus and Parks America

The main advantage of trading using opposite Arhaus and Parks America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus 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.

The idea behind Arhaus Inc and Parks America 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.