Correlation Between Park Electrochemical and Weyco
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and Weyco 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 Park Electrochemical and Weyco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Weyco Group, you can compare the effects of market volatilities on Park Electrochemical and Weyco 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 Park Electrochemical with a short position of Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Weyco.
Diversification Opportunities for Park Electrochemical and Weyco
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Weyco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Weyco go up and down completely randomly.
Pair Corralation between Park Electrochemical and Weyco
Considering the 90-day investment horizon Park Electrochemical is expected to generate 0.88 times more return on investment than Weyco. However, Park Electrochemical is 1.14 times less risky than Weyco. It trades about -0.05 of its potential returns per unit of risk. Weyco Group is currently generating about -0.16 per unit of risk. If you would invest 1,426 in Park Electrochemical on December 18, 2024 and sell it today you would lose (80.00) from holding Park Electrochemical or give up 5.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Park Electrochemical vs. Weyco Group
Performance |
Timeline |
Park Electrochemical |
Weyco Group |
Park Electrochemical and Weyco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Electrochemical and Weyco
The main advantage of trading using opposite Park Electrochemical and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, Weyco 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 Weyco will offset losses from the drop in Weyco's long position.Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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