Correlation Between Parke Bancorp and Pure Cycle

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

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

Diversification Opportunities for Parke Bancorp and Pure Cycle

0.92

Correlation Coefficient

Parke Bancorp  Pure Cycle

Almost no diversification

The 3 months correlation between Parke and Pure is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle and Parke Bancorp 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 Parke Bancorp are associated (or correlated) with Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of Parke Bancorp i.e., Parke Bancorp and Pure Cycle go up and down completely randomly.

Pair Corralation between Parke Bancorp and Pure Cycle

Given the investment horizon of 90 days Parke Bancorp is expected to generate 1.09 times less return on investment than Pure Cycle. But when comparing it to its historical volatility, Parke Bancorp is 1.1 times less risky than Pure Cycle. It trades about 0.17 of its potential returns per unit of risk. Pure Cycle is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  934.00  in Pure Cycle on September 3, 2024 and sell it today you would earn a total of  529.00  from holding Pure Cycle or generate 56.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Parke Bancorp  vs.  Pure Cycle

Parke Bancorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parke Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Parke Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pure Cycle

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Cycle are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Pure Cycle displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parke Bancorp and Pure Cycle

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

The idea behind Parke Bancorp and Pure Cycle 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.