Correlation Between PARKEN Sport and Air Canada

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

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

Diversification Opportunities for PARKEN Sport and Air Canada

0.41

Correlation Coefficient

PARKEN Sport  Air Canada

Very weak diversification

The 3 months correlation between PARKEN and Air is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and PARKEN Sport 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 PARKEN Sport Entertainment are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and Air Canada go up and down completely randomly.

Pair Corralation between PARKEN Sport and Air Canada

Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 1.16 times more return on investment than Air Canada. However, PARKEN Sport is 1.16 times more volatile than Air Canada. It trades about 0.2 of its potential returns per unit of risk. Air Canada is currently generating about -0.28 per unit of risk. If you would invest  1,685  in PARKEN Sport Entertainment on October 10, 2024 and sell it today you would earn a total of  190.00  from holding PARKEN Sport Entertainment or generate 11.28% return on investment over 90 days.

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

PARKEN Sport Entertainment  vs.  Air Canada

PARKEN Sport Enterta

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PARKEN Sport reported solid returns over the last few months and may actually be approaching a breakup point.

Air Canada

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Canada are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Air Canada unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PARKEN Sport and Air Canada

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

The idea behind PARKEN Sport Entertainment and Air Canada 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.