Correlation Between Parks America and Arhaus

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

By analyzing existing cross correlation between Parks America and Arhaus Inc, you can compare the effects of market volatilities on Parks America and Arhaus 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 Parks America with a short position of Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parks America and Arhaus.

Diversification Opportunities for Parks America and Arhaus

-0.39

Correlation Coefficient

Parks America  Arhaus

Very good diversification

The 3 months correlation between Parks and Arhaus is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Parks America and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Parks America 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 Parks America are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Parks America i.e., Parks America and Arhaus go up and down completely randomly.

Pair Corralation between Parks America and Arhaus

Given the investment horizon of 90 days Parks America is expected to under-perform the Arhaus. In addition to that, Parks America is 1.28 times more volatile than Arhaus Inc. It trades about -0.01 of its total potential returns per unit of risk. Arhaus Inc is currently generating about 0.21 per unit of volatility. If you would invest  915.00  in Arhaus Inc on September 17, 2024 and sell it today you would earn a total of  140.00  from holding Arhaus Inc or generate 15.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Parks America  vs.  Arhaus Inc

Parks America

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parks America are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking signals, Parks America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc 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 technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Parks America and Arhaus

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

The idea behind Parks America and Arhaus Inc 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 Anywhere module to track or share privately all of your investments from the convenience of any device.