Correlation Between Park Ohio and TOLEDO

Can any of the company-specific risk be diversified away by investing in both Park Ohio and TOLEDO 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 TOLEDO 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 TOLEDO HOSP 5325, you can compare the effects of market volatilities on Park Ohio and TOLEDO 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 TOLEDO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and TOLEDO.

Diversification Opportunities for Park Ohio and TOLEDO

-0.45

Correlation Coefficient

Park Ohio  TOLEDO

Very good diversification

The 3 months correlation between Park and TOLEDO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and TOLEDO HOSP 5325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOLEDO HOSP 5325 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 TOLEDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOLEDO HOSP 5325 has no effect on the direction of Park Ohio i.e., Park Ohio and TOLEDO go up and down completely randomly.

Pair Corralation between Park Ohio and TOLEDO

Given the investment horizon of 90 days Park Ohio Holdings is expected to under-perform the TOLEDO. But the stock apears to be less risky and, when comparing its historical volatility, Park Ohio Holdings is 2.05 times less risky than TOLEDO. The stock trades about -0.12 of its potential returns per unit of risk. The TOLEDO HOSP 5325 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9,707  in TOLEDO HOSP 5325 on December 23, 2024 and sell it today you would lose (943.00) from holding TOLEDO HOSP 5325 or give up 9.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.13%
Values	Daily Returns

Park Ohio Holdings  vs.  TOLEDO HOSP 5325

Park Ohio Holdings

Risk-Adjusted Performance

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 April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

TOLEDO HOSP 5325

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOLEDO HOSP 5325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for TOLEDO HOSP 5325 investors.

Pair Trading with Park Ohio and TOLEDO

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

The idea behind Park Ohio Holdings and TOLEDO HOSP 5325 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.