Correlation Between Parker Hannifin and Fanuc

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

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

Diversification Opportunities for Parker Hannifin and Fanuc

0.33

Correlation Coefficient

Parker Hannifin  Fanuc

Weak diversification

The 3 months correlation between Parker and Fanuc is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Fanuc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanuc 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 Fanuc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanuc has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Fanuc go up and down completely randomly.

Pair Corralation between Parker Hannifin and Fanuc

Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the Fanuc. In addition to that, Parker Hannifin is 1.03 times more volatile than Fanuc. It trades about 0.0 of its total potential returns per unit of risk. Fanuc is currently generating about 0.1 per unit of volatility. If you would invest  1,311  in Fanuc on December 28, 2024 and sell it today you would earn a total of  137.00  from holding Fanuc or generate 10.45% return on investment over 90 days.

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

Parker Hannifin  vs.  Fanuc

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.

Fanuc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Fanuc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Parker Hannifin and Fanuc

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

The idea behind Parker Hannifin and Fanuc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..