Correlation Between Parkland and Original Bark

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

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

Diversification Opportunities for Parkland and Original Bark

-0.01

Correlation Coefficient

Parkland  Original Bark

Good diversification

The 3 months correlation between Parkland and Original is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Parkland and Original Bark Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Original Bark and Parkland 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 are associated (or correlated) with Original Bark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Original Bark has no effect on the direction of Parkland i.e., Parkland and Original Bark go up and down completely randomly.

Pair Corralation between Parkland and Original Bark

Assuming the 90 days horizon Parkland is expected to generate 0.33 times more return on investment than Original Bark. However, Parkland is 3.06 times less risky than Original Bark. It trades about -0.06 of its potential returns per unit of risk. Original Bark Co is currently generating about -0.07 per unit of risk. If you would invest  2,442  in Parkland on October 16, 2024 and sell it today you would lose (51.00) from holding Parkland or give up 2.09% of portfolio value over 90 days.

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

Parkland  vs.  Original Bark Co

Parkland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parkland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Original Bark

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Original Bark Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Original Bark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parkland and Original Bark

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

The idea behind Parkland and Original Bark Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.