Correlation Between Four Leaf and Parker Hannifin

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

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

Diversification Opportunities for Four Leaf and Parker Hannifin

0.5

Correlation Coefficient

Four Leaf  Parker Hannifin

Very weak diversification

The 3 months correlation between Four and Parker is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Four Leaf Acquisition and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Four Leaf 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 Four Leaf Acquisition 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 Four Leaf i.e., Four Leaf and Parker Hannifin go up and down completely randomly.

Pair Corralation between Four Leaf and Parker Hannifin

Given the investment horizon of 90 days Four Leaf Acquisition is expected to generate 0.2 times more return on investment than Parker Hannifin. However, Four Leaf Acquisition is 4.99 times less risky than Parker Hannifin. It trades about 0.12 of its potential returns per unit of risk. Parker Hannifin is currently generating about -0.42 per unit of risk. If you would invest  1,104  in Four Leaf Acquisition on October 2, 2024 and sell it today you would earn a total of  6.00  from holding Four Leaf Acquisition or generate 0.54% return on investment over 90 days.

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

Four Leaf Acquisition  vs.  Parker Hannifin

Four Leaf Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Leaf Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Four Leaf is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Parker Hannifin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 1 (%) 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 current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Four Leaf and Parker Hannifin

The main advantage of trading using opposite Four Leaf and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Leaf 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 Four Leaf Acquisition 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.