Correlation Between Park Ohio and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Park Ohio and Academy Sports 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 Park Ohio and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Academy Sports Outdoors, you can compare the effects of market volatilities on Park Ohio and Academy Sports 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 Park Ohio with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Academy Sports.
Diversification Opportunities for Park Ohio and Academy Sports
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Park and Academy is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors and Park Ohio 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 Park Ohio Holdings are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of Park Ohio i.e., Park Ohio and Academy Sports go up and down completely randomly.
Pair Corralation between Park Ohio and Academy Sports
Given the investment horizon of 90 days Park Ohio Holdings is expected to under-perform the Academy Sports. In addition to that, Park Ohio is 1.19 times more volatile than Academy Sports Outdoors. It trades about -0.06 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.04 per unit of volatility. If you would invest 5,245 in Academy Sports Outdoors on October 25, 2024 and sell it today you would earn a total of 229.50 from holding Academy Sports Outdoors or generate 4.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Park Ohio Holdings vs. Academy Sports Outdoors
Performance |
Timeline |
Park Ohio Holdings |
Academy Sports Outdoors |
Park Ohio and Academy Sports Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Ohio and Academy Sports
The main advantage of trading using opposite Park Ohio and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio position performs unexpectedly, Academy Sports 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 Academy Sports will offset losses from the drop in Academy Sports' long position.Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
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Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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