Correlation Between Park National and BAKER

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

By analyzing existing cross correlation between Park National and BAKER HUGHES A, you can compare the effects of market volatilities on Park National and BAKER 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 National with a short position of BAKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park National and BAKER.

Diversification Opportunities for Park National and BAKER

-0.67

Correlation Coefficient

Park National  BAKER

Excellent diversification

The 3 months correlation between Park and BAKER is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Park National and BAKER HUGHES A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKER HUGHES A and Park National 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 National are associated (or correlated) with BAKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKER HUGHES A has no effect on the direction of Park National i.e., Park National and BAKER go up and down completely randomly.

Pair Corralation between Park National and BAKER

Considering the 90-day investment horizon Park National is expected to under-perform the BAKER. In addition to that, Park National is 7.5 times more volatile than BAKER HUGHES A. It trades about -0.12 of its total potential returns per unit of risk. BAKER HUGHES A is currently generating about 0.01 per unit of volatility. If you would invest  9,620  in BAKER HUGHES A on December 20, 2024 and sell it today you would earn a total of  14.00  from holding BAKER HUGHES A or generate 0.15% return on investment over 90 days.

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

Park National  vs.  BAKER HUGHES A

Park National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

BAKER HUGHES A

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BAKER HUGHES A are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BAKER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Park National and BAKER

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

The idea behind Park National and BAKER HUGHES A 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.