Correlation Between Parker Hannifin and 26884ABB8

Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and 26884ABB8 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 26884ABB8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Parker Hannifin and ERP OPER LTD, you can compare the effects of market volatilities on Parker Hannifin and 26884ABB8 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 26884ABB8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and 26884ABB8.

Diversification Opportunities for Parker Hannifin and 26884ABB8

-0.42

Correlation Coefficient

Parker Hannifin  26884ABB8

Very good diversification

The 3 months correlation between Parker and 26884ABB8 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and ERP OPER LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERP OPER LTD 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 26884ABB8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERP OPER LTD has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and 26884ABB8 go up and down completely randomly.

Pair Corralation between Parker Hannifin and 26884ABB8

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 2.46 times more return on investment than 26884ABB8. However, Parker Hannifin is 2.46 times more volatile than ERP OPER LTD. It trades about 0.01 of its potential returns per unit of risk. ERP OPER LTD is currently generating about 0.02 per unit of risk. If you would invest  64,988  in Parker Hannifin on December 26, 2024 and sell it today you would earn a total of  148.00  from holding Parker Hannifin or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

Parker Hannifin  vs.  ERP OPER LTD

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.

ERP OPER LTD

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ERP OPER LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 26884ABB8 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 26884ABB8

The main advantage of trading using opposite Parker Hannifin and 26884ABB8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, 26884ABB8 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 26884ABB8 will offset losses from the drop in 26884ABB8's long position.

The idea behind Parker Hannifin and ERP OPER LTD 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.