Correlation Between Parker Hannifin and Cenovus

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

By analyzing existing cross correlation between Parker Hannifin and Cenovus Energy 425, you can compare the effects of market volatilities on Parker Hannifin and Cenovus 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 Cenovus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Cenovus.

Diversification Opportunities for Parker Hannifin and Cenovus

-0.17

Correlation Coefficient

Parker Hannifin  Cenovus

Good diversification

The 3 months correlation between Parker and Cenovus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Cenovus Energy 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy 425 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 Cenovus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenovus Energy 425 has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Cenovus go up and down completely randomly.

Pair Corralation between Parker Hannifin and Cenovus

Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the Cenovus. In addition to that, Parker Hannifin is 1.68 times more volatile than Cenovus Energy 425. It trades about -0.27 of its total potential returns per unit of risk. Cenovus Energy 425 is currently generating about -0.36 per unit of volatility. If you would invest  9,895  in Cenovus Energy 425 on October 10, 2024 and sell it today you would lose (267.00) from holding Cenovus Energy 425 or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Parker Hannifin  vs.  Cenovus Energy 425

Parker Hannifin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Cenovus Energy 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cenovus Energy 425 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cenovus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Parker Hannifin and Cenovus

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

The idea behind Parker Hannifin and Cenovus Energy 425 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.