Correlation Between Parkland and EVgo Equity

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

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

Diversification Opportunities for Parkland and EVgo Equity

-0.08

Correlation Coefficient

Parkland  EVgo Equity

Good diversification

The 3 months correlation between Parkland and EVgo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Parkland and EVgo Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVgo Equity Warrants 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 EVgo Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVgo Equity Warrants has no effect on the direction of Parkland i.e., Parkland and EVgo Equity go up and down completely randomly.

Pair Corralation between Parkland and EVgo Equity

Assuming the 90 days horizon Parkland is expected to generate 9.86 times less return on investment than EVgo Equity. But when comparing it to its historical volatility, Parkland is 4.44 times less risky than EVgo Equity. It trades about 0.02 of its potential returns per unit of risk. EVgo Equity Warrants is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  58.00  in EVgo Equity Warrants on September 26, 2024 and sell it today you would earn a total of  9.00  from holding EVgo Equity Warrants or generate 15.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

Parkland  vs.  EVgo Equity Warrants

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 fragile 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.

EVgo Equity Warrants

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVgo Equity Warrants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EVgo Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parkland and EVgo Equity

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

The idea behind Parkland and EVgo Equity Warrants 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.