Correlation Between United Homes and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both United Homes and Parker Hannifin 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 United Homes and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and Parker Hannifin, you can compare the effects of market volatilities on United Homes and Parker Hannifin 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 United Homes with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Parker Hannifin.
Diversification Opportunities for United Homes and Parker Hannifin
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Parker is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and United Homes 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 United Homes Group are associated (or correlated) with Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of United Homes i.e., United Homes and Parker Hannifin go up and down completely randomly.
Pair Corralation between United Homes and Parker Hannifin
Considering the 90-day investment horizon United Homes Group is expected to under-perform the Parker Hannifin. In addition to that, United Homes is 3.02 times more volatile than Parker Hannifin. It trades about -0.16 of its total potential returns per unit of risk. Parker Hannifin is currently generating about -0.04 per unit of volatility. If you would invest 69,904 in Parker Hannifin on December 2, 2024 and sell it today you would lose (3,053) from holding Parker Hannifin or give up 4.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Homes Group vs. Parker Hannifin
Performance |
Timeline |
United Homes Group |
Parker Hannifin |
United Homes and Parker Hannifin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Homes and Parker Hannifin
The main advantage of trading using opposite United Homes and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.United Homes vs. Aptiv PLC | United Homes vs. FDG Electric Vehicles | United Homes vs. Simpson Manufacturing | United Homes vs. Shimmick Common |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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