Correlation Between Allient and Parker Hannifin

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

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

Diversification Opportunities for Allient and Parker Hannifin

0.8

Correlation Coefficient

Allient  Parker Hannifin

Very poor diversification

The 3 months correlation between Allient and Parker is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Allient 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 Allient are associated (or correlated) with Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Allient i.e., Allient and Parker Hannifin go up and down completely randomly.

Pair Corralation between Allient and Parker Hannifin

Given the investment horizon of 90 days Allient is expected to generate 2.1 times more return on investment than Parker Hannifin. However, Allient is 2.1 times more volatile than Parker Hannifin. It trades about -0.12 of its potential returns per unit of risk. Parker Hannifin is currently generating about -0.41 per unit of risk. If you would invest  2,529  in Allient on September 25, 2024 and sell it today you would lose (143.00) from holding Allient or give up 5.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Allient  vs.  Parker Hannifin

Allient

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Parker Hannifin

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Parker Hannifin is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Allient and Parker Hannifin

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

The idea behind Allient and Parker Hannifin 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.