Correlation Between Park Electrochemical and LXP Industrial

Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and LXP Industrial 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 LXP Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Park Electrochemical and LXP Industrial Trust, you can compare the effects of market volatilities on Park Electrochemical and LXP Industrial 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 LXP Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and LXP Industrial.

Diversification Opportunities for Park Electrochemical and LXP Industrial

-0.13

Correlation Coefficient

Park Electrochemical  LXP Industrial

Good diversification

The 3 months correlation between Park and LXP is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust 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 LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and LXP Industrial go up and down completely randomly.

Pair Corralation between Park Electrochemical and LXP Industrial

Considering the 90-day investment horizon Park Electrochemical is expected to generate 2.21 times more return on investment than LXP Industrial. However, Park Electrochemical is 2.21 times more volatile than LXP Industrial Trust. It trades about 0.2 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about -0.01 per unit of risk. If you would invest  1,300  in Park Electrochemical on May 6, 2025 and sell it today you would earn a total of  487.00  from holding Park Electrochemical or generate 37.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Park Electrochemical  vs.  LXP Industrial Trust

Park Electrochemical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Park Electrochemical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Park Electrochemical exhibited solid returns over the last few months and may actually be approaching a breakup point.

LXP Industrial Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days LXP Industrial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, LXP Industrial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Park Electrochemical and LXP Industrial

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

The idea behind Park Electrochemical and LXP Industrial Trust 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.