Correlation Between Parker Hannifin and Millennium Group

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

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

Diversification Opportunities for Parker Hannifin and Millennium Group

-0.32

Correlation Coefficient

Parker Hannifin  Millennium Group

Very good diversification

The 3 months correlation between Parker and Millennium is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Millennium Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Group Int 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 Millennium Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Group Int has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Millennium Group go up and down completely randomly.

Pair Corralation between Parker Hannifin and Millennium Group

Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the Millennium Group. But the stock apears to be less risky and, when comparing its historical volatility, Parker Hannifin is 21.81 times less risky than Millennium Group. The stock trades about -0.45 of its potential returns per unit of risk. The Millennium Group International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  151.00  in Millennium Group International on October 6, 2024 and sell it today you would earn a total of  29.00  from holding Millennium Group International or generate 19.21% return on investment over 90 days.

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

Parker Hannifin  vs.  Millennium Group International

Parker Hannifin

Risk-Adjusted Performance

0 of 100

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.

Millennium Group Int

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Millennium Group International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Millennium Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parker Hannifin and Millennium Group

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

The idea behind Parker Hannifin and Millennium Group International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.