Correlation Between PARKSON RETAIL and SPARTAN STORES

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Can any of the company-specific risk be diversified away by investing in both PARKSON RETAIL and SPARTAN STORES 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 PARKSON RETAIL and SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKSON RETAIL GRP and SPARTAN STORES, you can compare the effects of market volatilities on PARKSON RETAIL and SPARTAN STORES 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 PARKSON RETAIL with a short position of SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKSON RETAIL and SPARTAN STORES.

Diversification Opportunities for PARKSON RETAIL and SPARTAN STORES

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PARKSON and SPARTAN is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PARKSON RETAIL GRP and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and PARKSON RETAIL 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 PARKSON RETAIL GRP are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of PARKSON RETAIL i.e., PARKSON RETAIL and SPARTAN STORES go up and down completely randomly.

Pair Corralation between PARKSON RETAIL and SPARTAN STORES

If you would invest  1,899  in SPARTAN STORES on August 2, 2024 and sell it today you would earn a total of  51.00  from holding SPARTAN STORES or generate 2.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy73.44%
ValuesDaily Returns

PARKSON RETAIL GRP  vs.  SPARTAN STORES

 Performance 
       Timeline  
PARKSON RETAIL GRP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PARKSON RETAIL GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PARKSON RETAIL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
SPARTAN STORES 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in SPARTAN STORES are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, SPARTAN STORES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PARKSON RETAIL and SPARTAN STORES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PARKSON RETAIL and SPARTAN STORES

The main advantage of trading using opposite PARKSON RETAIL and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKSON RETAIL position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.
The idea behind PARKSON RETAIL GRP and SPARTAN STORES 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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