Correlation Between Parkland Fuel and Advanced Micro

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

By analyzing existing cross correlation between Parkland Fuel and Advanced Micro Devices, you can compare the effects of market volatilities on Parkland Fuel and Advanced Micro 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 Parkland Fuel with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkland Fuel and Advanced Micro.

Diversification Opportunities for Parkland Fuel and Advanced Micro

-0.12

Correlation Coefficient

Parkland Fuel  Advanced Micro

Good diversification

The 3 months correlation between Parkland and Advanced is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Parkland Fuel and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Parkland Fuel 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 Parkland Fuel are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Parkland Fuel i.e., Parkland Fuel and Advanced Micro go up and down completely randomly.

Pair Corralation between Parkland Fuel and Advanced Micro

Assuming the 90 days trading horizon Parkland Fuel is expected to generate 0.94 times more return on investment than Advanced Micro. However, Parkland Fuel is 1.06 times less risky than Advanced Micro. It trades about 0.01 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.23 per unit of risk. If you would invest  3,557  in Parkland Fuel on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Parkland Fuel or generate 0.14% return on investment over 90 days.

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

Parkland Fuel  vs.  Advanced Micro Devices

Parkland Fuel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parkland Fuel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Parkland Fuel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Advanced Micro Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Parkland Fuel and Advanced Micro

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

The idea behind Parkland Fuel and Advanced Micro Devices 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.