Correlation Between Park Ohio and SL Green

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

Diversification Opportunities for Park Ohio and SL Green

0.79

Correlation Coefficient

Park Ohio  SL Green

Poor diversification

The 3 months correlation between Park and SLG is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Park Ohio i.e., Park Ohio and SL Green go up and down completely randomly.

Pair Corralation between Park Ohio and SL Green

Given the investment horizon of 90 days Park Ohio Holdings is expected to under-perform the SL Green. But the stock apears to be less risky and, when comparing its historical volatility, Park Ohio Holdings is 1.13 times less risky than SL Green. The stock trades about -0.6 of its potential returns per unit of risk. The SL Green Realty is currently generating about -0.45 of returns per unit of risk over similar time horizon. If you would invest  7,505  in SL Green Realty on October 15, 2024 and sell it today you would lose (1,323) from holding SL Green Realty or give up 17.63% of portfolio value over 90 days.

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

Park Ohio Holdings  vs.  SL Green Realty

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Park Ohio and SL Green

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

The idea behind Park Ohio Holdings and SL Green Realty 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.