Correlation Between Parkland Fuel and INTEL CDR

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

By analyzing existing cross correlation between Parkland Fuel and INTEL CDR, you can compare the effects of market volatilities on Parkland Fuel and INTEL CDR 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 INTEL CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkland Fuel and INTEL CDR.

Diversification Opportunities for Parkland Fuel and INTEL CDR

0.71

Correlation Coefficient

Parkland Fuel  INTEL CDR

Poor diversification

The 3 months correlation between Parkland and INTEL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Parkland Fuel and INTEL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL CDR 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 INTEL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL CDR has no effect on the direction of Parkland Fuel i.e., Parkland Fuel and INTEL CDR go up and down completely randomly.

Pair Corralation between Parkland Fuel and INTEL CDR

Assuming the 90 days trading horizon Parkland Fuel is expected to generate 0.59 times more return on investment than INTEL CDR. However, Parkland Fuel is 1.7 times less risky than INTEL CDR. It trades about 0.03 of its potential returns per unit of risk. INTEL CDR is currently generating about 0.01 per unit of risk. If you would invest  3,577  in Parkland Fuel on November 29, 2024 and sell it today you would earn a total of  103.00  from holding Parkland Fuel or generate 2.88% return on investment over 90 days.

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

Parkland Fuel  vs.  INTEL CDR

Parkland Fuel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parkland Fuel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

INTEL CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTEL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INTEL CDR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Parkland Fuel and INTEL CDR

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

The idea behind Parkland Fuel and INTEL CDR 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.