Correlation Between Parker Hannifin and FEDEX

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

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

Diversification Opportunities for Parker Hannifin and FEDEX

-0.56

Correlation Coefficient

Parker Hannifin  FEDEX

Excellent diversification

The 3 months correlation between Parker and FEDEX is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and FEDEX P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and FEDEX go up and down completely randomly.

Pair Corralation between Parker Hannifin and FEDEX

Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the FEDEX. But the stock apears to be less risky and, when comparing its historical volatility, Parker Hannifin is 1.01 times less risky than FEDEX. The stock trades about -0.1 of its potential returns per unit of risk. The FEDEX P is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9,702  in FEDEX P on September 13, 2024 and sell it today you would earn a total of  17.00  from holding FEDEX P or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Parker Hannifin  vs.  FEDEX P

Parker Hannifin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Parker Hannifin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

FEDEX P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Parker Hannifin and FEDEX

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

The idea behind Parker Hannifin and FEDEX P 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..