Correlation Between Parker Hannifin and Nordex SE

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

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

Diversification Opportunities for Parker Hannifin and Nordex SE

-0.76

Correlation Coefficient

Parker Hannifin  Nordex SE

Pay attention - limited upside

The 3 months correlation between Parker and Nordex is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Nordex SE go up and down completely randomly.

Pair Corralation between Parker Hannifin and Nordex SE

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.64 times more return on investment than Nordex SE. However, Parker Hannifin is 1.64 times more volatile than Nordex SE. It trades about 0.23 of its potential returns per unit of risk. Nordex SE is currently generating about -0.09 per unit of risk. If you would invest  57,399  in Parker Hannifin on September 2, 2024 and sell it today you would earn a total of  12,891  from holding Parker Hannifin or generate 22.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Parker Hannifin  vs.  Nordex SE

Parker Hannifin

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Parker Hannifin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Nordex SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordex SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nordex SE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Parker Hannifin and Nordex SE

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

The idea behind Parker Hannifin and Nordex SE 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.