Correlation Between DXP Enterprises and Park Ohio
Can any of the company-specific risk be diversified away by investing in both DXP Enterprises and Park Ohio 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 DXP Enterprises and Park Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXP Enterprises and Park Ohio Holdings, you can compare the effects of market volatilities on DXP Enterprises and Park Ohio 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 DXP Enterprises with a short position of Park Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXP Enterprises and Park Ohio.
Diversification Opportunities for DXP Enterprises and Park Ohio
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DXP and Park is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding DXP Enterprises and Park Ohio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ohio Holdings and DXP Enterprises 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 DXP Enterprises are associated (or correlated) with Park Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ohio Holdings has no effect on the direction of DXP Enterprises i.e., DXP Enterprises and Park Ohio go up and down completely randomly.
Pair Corralation between DXP Enterprises and Park Ohio
Given the investment horizon of 90 days DXP Enterprises is expected to generate 1.02 times more return on investment than Park Ohio. However, DXP Enterprises is 1.02 times more volatile than Park Ohio Holdings. It trades about -0.02 of its potential returns per unit of risk. Park Ohio Holdings is currently generating about -0.23 per unit of risk. If you would invest 5,211 in DXP Enterprises on January 24, 2024 and sell it today you would lose (55.00) from holding DXP Enterprises or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXP Enterprises vs. Park Ohio Holdings
Performance |
| Timeline |
| DXP Enterprises |
| Park Ohio Holdings |
DXP Enterprises and Park Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXP Enterprises and Park Ohio
The main advantage of trading using opposite DXP Enterprises and Park Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXP Enterprises position performs unexpectedly, Park Ohio 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 Park Ohio will offset losses from the drop in Park Ohio's long position.| DXP Enterprises vs. Global Industrial Co | DXP Enterprises vs. EVI Industries | DXP Enterprises vs. Core Main | DXP Enterprises vs. Distribution Solutions Group |
| Park Ohio vs. Emerson Electric | Park Ohio vs. Eaton PLC | Park Ohio vs. Generac Holdings | Park Ohio vs. Cummins |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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