Correlation Between Parker Hannifin and G III

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

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

Diversification Opportunities for Parker Hannifin and G III

0.24

Correlation Coefficient

Parker Hannifin  G III

Modest diversification

The 3 months correlation between Parker and GIII is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and G III go up and down completely randomly.

Pair Corralation between Parker Hannifin and G III

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.87 times more return on investment than G III. However, Parker Hannifin is 1.15 times less risky than G III. It trades about -0.02 of its potential returns per unit of risk. G III Apparel Group is currently generating about -0.19 per unit of risk. If you would invest  64,228  in Parker Hannifin on December 18, 2024 and sell it today you would lose (2,070) from holding Parker Hannifin or give up 3.22% of portfolio value over 90 days.

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

Parker Hannifin  vs.  G III Apparel Group

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.

G III Apparel

Risk-Adjusted Performance

Very Weak

Over the last 90 days G III Apparel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Parker Hannifin and G III

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

The idea behind Parker Hannifin and G III Apparel 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.