Correlation Between GMS and Parker Hannifin

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

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

Diversification Opportunities for GMS and Parker Hannifin

0.62

Correlation Coefficient

GMS  Parker Hannifin

Poor diversification

The 3 months correlation between GMS and Parker is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and GMS 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 GMS Inc 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 GMS i.e., GMS and Parker Hannifin go up and down completely randomly.

Pair Corralation between GMS and Parker Hannifin

Considering the 90-day investment horizon GMS Inc is expected to under-perform the Parker Hannifin. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 1.02 times less risky than Parker Hannifin. The stock trades about -0.16 of its potential returns per unit of risk. The Parker Hannifin is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  64,413  in Parker Hannifin on December 23, 2024 and sell it today you would lose (2,203) from holding Parker Hannifin or give up 3.42% of portfolio value over 90 days.

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

GMS Inc  vs.  Parker Hannifin

GMS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Parker Hannifin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parker Hannifin has generated negative risk-adjusted returns adding no value to investors with long positions. 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 GMS and Parker Hannifin

The main advantage of trading using opposite GMS and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..