Correlation Between Park Electrochemical and Woodward
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and Woodward 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 Electrochemical and Woodward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Woodward, you can compare the effects of market volatilities on Park Electrochemical and Woodward 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 Electrochemical with a short position of Woodward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Woodward.
Diversification Opportunities for Park Electrochemical and Woodward
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Park and Woodward is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward and Park Electrochemical 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 Electrochemical are associated (or correlated) with Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Woodward go up and down completely randomly.
Pair Corralation between Park Electrochemical and Woodward
Considering the 90-day investment horizon Park Electrochemical is expected to generate 5.39 times less return on investment than Woodward. In addition to that, Park Electrochemical is 1.05 times more volatile than Woodward. It trades about 0.02 of its total potential returns per unit of risk. Woodward is currently generating about 0.14 per unit of volatility. If you would invest 9,155 in Woodward on March 9, 2024 and sell it today you would earn a total of 9,052 from holding Woodward or generate 98.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Park Electrochemical vs. Woodward
Performance |
Timeline |
Park Electrochemical |
Woodward |
Park Electrochemical and Woodward Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Electrochemical and Woodward
The main advantage of trading using opposite Park Electrochemical and Woodward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, Woodward 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 Woodward will offset losses from the drop in Woodward's long position.Park Electrochemical vs. HEICO | Park Electrochemical vs. L3Harris Technologies | Park Electrochemical vs. Huntington Ingalls Industries | Park Electrochemical vs. Lockheed Martin |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |