Correlation Between Lendlease and Parker Hannifin

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

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

Diversification Opportunities for Lendlease and Parker Hannifin

-0.17

Correlation Coefficient

Lendlease  Parker Hannifin

Good diversification

The 3 months correlation between Lendlease and Parker is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and Parker Hannifin go up and down completely randomly.

Pair Corralation between Lendlease and Parker Hannifin

Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Parker Hannifin. In addition to that, Lendlease is 1.08 times more volatile than Parker Hannifin. It trades about -0.01 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.09 per unit of volatility. If you would invest  28,265  in Parker Hannifin on September 29, 2024 and sell it today you would earn a total of  34,275  from holding Parker Hannifin or generate 121.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Lendlease Group  vs.  Parker Hannifin

Lendlease Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Parker Hannifin

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Parker Hannifin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lendlease and Parker Hannifin

The main advantage of trading using opposite Lendlease and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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 Lendlease Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.