Correlation Between Parker Hannifin and GEN Restaurant

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

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

Diversification Opportunities for Parker Hannifin and GEN Restaurant

0.08

Correlation Coefficient

Parker Hannifin  GEN Restaurant

Significant diversification

The 3 months correlation between Parker and GEN is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and GEN Restaurant go up and down completely randomly.

Pair Corralation between Parker Hannifin and GEN Restaurant

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 13.81 times less return on investment than GEN Restaurant. But when comparing it to its historical volatility, Parker Hannifin is 31.03 times less risky than GEN Restaurant. It trades about 0.11 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in GEN Restaurant Group, on September 18, 2024 and sell it today you would earn a total of  803.00  from holding GEN Restaurant Group, or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Parker Hannifin  vs.  GEN Restaurant Group,

Parker Hannifin

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Parker Hannifin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Parker Hannifin and GEN Restaurant

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

The idea behind Parker Hannifin and GEN Restaurant Group, 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 Global Correlations module to find global opportunities by holding instruments from different markets.