Correlation Between Parker Hannifin and Dodge Cox

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

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

Diversification Opportunities for Parker Hannifin and Dodge Cox

0.16

Correlation Coefficient

Parker Hannifin  Dodge Cox

Average diversification

The 3 months correlation between Parker and Dodge is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Dodge Global Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Global Stock and Parker Hannifin 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 Parker Hannifin are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Global Stock has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Dodge Cox go up and down completely randomly.

Pair Corralation between Parker Hannifin and Dodge Cox

Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the Dodge Cox. In addition to that, Parker Hannifin is 2.37 times more volatile than Dodge Global Stock. It trades about 0.0 of its total potential returns per unit of risk. Dodge Global Stock is currently generating about 0.17 per unit of volatility. If you would invest  1,369  in Dodge Global Stock on December 28, 2024 and sell it today you would earn a total of  112.00  from holding Dodge Global Stock or generate 8.18% return on investment over 90 days.

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

Parker Hannifin  vs.  Dodge Global Stock

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.

Dodge Global Stock

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Global Stock are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Parker Hannifin and Dodge Cox

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

The idea behind Parker Hannifin and Dodge Global Stock 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.