Correlation Between Park Ohio and Mativ Holdings

Can any of the company-specific risk be diversified away by investing in both Park Ohio and Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings, you can compare the effects of market volatilities on Park Ohio and Mativ Holdings 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 Mativ Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Mativ Holdings.

Diversification Opportunities for Park Ohio and Mativ Holdings

-0.35

Correlation Coefficient

Park Ohio  Mativ Holdings

Very good diversification

The 3 months correlation between Park and Mativ is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings 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 Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Park Ohio i.e., Park Ohio and Mativ Holdings go up and down completely randomly.

Pair Corralation between Park Ohio and Mativ Holdings

Given the investment horizon of 90 days Park Ohio Holdings is expected to under-perform the Mativ Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Park Ohio Holdings is 1.45 times less risky than Mativ Holdings. The stock trades about -0.62 of its potential returns per unit of risk. The Mativ Holdings is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  1,309  in Mativ Holdings on September 23, 2024 and sell it today you would lose (163.00) from holding Mativ Holdings or give up 12.45% of portfolio value over 90 days.

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

Park Ohio Holdings  vs.  Mativ Holdings

Park Ohio Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park Ohio Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Park Ohio and Mativ Holdings

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

The idea behind Park Ohio Holdings and Mativ Holdings 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.