Correlation Between Parker Hannifin and Sadot

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

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

Diversification Opportunities for Parker Hannifin and Sadot

-0.3

Correlation Coefficient

Parker Hannifin  Sadot

Very good diversification

The 3 months correlation between Parker and Sadot is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Sadot Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sadot 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 Sadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sadot Group has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Sadot go up and down completely randomly.

Pair Corralation between Parker Hannifin and Sadot

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.44 times more return on investment than Sadot. However, Parker Hannifin is 2.26 times less risky than Sadot. It trades about -0.02 of its potential returns per unit of risk. Sadot Group is currently generating about -0.1 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Parker Hannifin  vs.  Sadot 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.

Sadot Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sadot Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Parker Hannifin and Sadot

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

The idea behind Parker Hannifin and Sadot 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.