Correlation Between Investec and Parke Bancorp
Can any of the company-specific risk be diversified away by investing in both Investec and Parke Bancorp 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 Investec and Parke Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Ltd ADR and Parke Bancorp, you can compare the effects of market volatilities on Investec and Parke Bancorp 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 Investec with a short position of Parke Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec and Parke Bancorp.
Diversification Opportunities for Investec and Parke Bancorp
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investec and Parke is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Investec Ltd ADR and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke Bancorp and Investec 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 Investec Ltd ADR are associated (or correlated) with Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of Investec i.e., Investec and Parke Bancorp go up and down completely randomly.
Pair Corralation between Investec and Parke Bancorp
Assuming the 90 days horizon Investec Ltd ADR is expected to generate 3.34 times more return on investment than Parke Bancorp. However, Investec is 3.34 times more volatile than Parke Bancorp. It trades about 0.05 of its potential returns per unit of risk. Parke Bancorp is currently generating about 0.01 per unit of risk. If you would invest 1,135 in Investec Ltd ADR on October 4, 2024 and sell it today you would earn a total of 535.00 from holding Investec Ltd ADR or generate 47.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 87.88% |
Values | Daily Returns |
Investec Ltd ADR vs. Parke Bancorp
Performance |
Timeline |
Investec ADR |
Parke Bancorp |
Investec and Parke Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Investec and Parke Bancorp
The main advantage of trading using opposite Investec and Parke Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec position performs unexpectedly, Parke Bancorp 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 Parke Bancorp will offset losses from the drop in Parke Bancorp's long position.Investec vs. Century Financial Corp | Investec vs. Bank Utica Ny | Investec vs. Killbuck Bancshares | Investec vs. CNB Corporation |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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