Correlation Between Parker Hannifin and Nordson
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Nordson 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 Nordson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Nordson, you can compare the effects of market volatilities on Parker Hannifin and Nordson 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 Nordson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Nordson.
Diversification Opportunities for Parker Hannifin and Nordson
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Parker and Nordson is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Nordson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordson 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 Nordson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordson has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Nordson go up and down completely randomly.
Pair Corralation between Parker Hannifin and Nordson
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.26 times more return on investment than Nordson. However, Parker Hannifin is 1.26 times more volatile than Nordson. It trades about 0.2 of its potential returns per unit of risk. Nordson is currently generating about 0.04 per unit of risk. If you would invest 57,973 in Parker Hannifin on September 10, 2024 and sell it today you would earn a total of 11,412 from holding Parker Hannifin or generate 19.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Parker Hannifin vs. Nordson
Performance |
Timeline |
Parker Hannifin |
Nordson |
Parker Hannifin and Nordson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Parker Hannifin and Nordson
The main advantage of trading using opposite Parker Hannifin and Nordson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Nordson 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 Nordson will offset losses from the drop in Nordson's long position.Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
Nordson vs. Illinois Tool Works | Nordson vs. Pentair PLC | Nordson vs. Parker Hannifin | Nordson vs. Emerson Electric |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |