Correlation Between Parker Hannifin and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Skechers USA 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 Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Skechers USA, you can compare the effects of market volatilities on Parker Hannifin and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Skechers USA.
Diversification Opportunities for Parker Hannifin and Skechers USA
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Parker and Skechers is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Skechers USA go up and down completely randomly.
Pair Corralation between Parker Hannifin and Skechers USA
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.57 times more return on investment than Skechers USA. However, Parker Hannifin is 1.75 times less risky than Skechers USA. It trades about -0.07 of its potential returns per unit of risk. Skechers USA is currently generating about -0.11 per unit of risk. If you would invest 69,485 in Parker Hannifin on December 4, 2024 and sell it today you would lose (4,429) from holding Parker Hannifin or give up 6.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Parker Hannifin vs. Skechers USA
Performance |
Timeline |
Parker Hannifin |
Skechers USA |
Parker Hannifin and Skechers USA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Parker Hannifin and Skechers USA
The main advantage of trading using opposite Parker Hannifin and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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