Correlation Between Parkland and Sportsmans

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

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

Diversification Opportunities for Parkland and Sportsmans

0.34

Correlation Coefficient

Parkland  Sportsmans

Weak diversification

The 3 months correlation between Parkland and Sportsmans is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Parkland and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans 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 Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of Parkland i.e., Parkland and Sportsmans go up and down completely randomly.

Pair Corralation between Parkland and Sportsmans

Assuming the 90 days horizon Parkland is expected to generate 0.46 times more return on investment than Sportsmans. However, Parkland is 2.19 times less risky than Sportsmans. It trades about -0.05 of its potential returns per unit of risk. Sportsmans is currently generating about -0.03 per unit of risk. If you would invest  3,196  in Parkland on September 28, 2024 and sell it today you would lose (906.00) from holding Parkland or give up 28.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

Parkland  vs.  Sportsmans

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.

Sportsmans

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sportsmans are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Sportsmans may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Parkland and Sportsmans

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

The idea behind Parkland and Sportsmans 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.