Correlation Between CRA International and Parkland
Can any of the company-specific risk be diversified away by investing in both CRA International and Parkland 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 CRA International and Parkland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRA International and Parkland, you can compare the effects of market volatilities on CRA International and Parkland 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 CRA International with a short position of Parkland. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRA International and Parkland.
Diversification Opportunities for CRA International and Parkland
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CRA and Parkland is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and Parkland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkland and CRA International 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 CRA International are associated (or correlated) with Parkland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkland has no effect on the direction of CRA International i.e., CRA International and Parkland go up and down completely randomly.
Pair Corralation between CRA International and Parkland
Given the investment horizon of 90 days CRA International is expected to generate 0.94 times more return on investment than Parkland. However, CRA International is 1.06 times less risky than Parkland. It trades about -0.07 of its potential returns per unit of risk. Parkland is currently generating about -0.12 per unit of risk. If you would invest 19,376 in CRA International on September 24, 2024 and sell it today you would lose (921.00) from holding CRA International or give up 4.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CRA International vs. Parkland
Performance |
Timeline |
CRA International |
Parkland |
CRA International and Parkland Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CRA International and Parkland
The main advantage of trading using opposite CRA International and Parkland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRA International position performs unexpectedly, Parkland 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 Parkland will offset losses from the drop in Parkland's long position.CRA International vs. Franklin Covey | CRA International vs. ICF International | CRA International vs. Huron Consulting Group | CRA International vs. FTI Consulting |
Parkland vs. Meso Numismatics | Parkland vs. Tandy Leather Factory | Parkland vs. EVgo Equity Warrants | Parkland vs. Sally Beauty Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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