Correlation Between Centene and Parker Hannifin

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

By analyzing existing cross correlation between Centene 4625 percent and Parker Hannifin, you can compare the effects of market volatilities on Centene 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 Centene with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene and Parker Hannifin.

Diversification Opportunities for Centene and Parker Hannifin

0.02

Correlation Coefficient

Centene  Parker Hannifin

Significant diversification

The 3 months correlation between Centene and Parker is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Centene 4625 percent and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Centene 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 Centene 4625 percent 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 Centene i.e., Centene and Parker Hannifin go up and down completely randomly.

Pair Corralation between Centene and Parker Hannifin

Assuming the 90 days trading horizon Centene 4625 percent is expected to generate 0.31 times more return on investment than Parker Hannifin. However, Centene 4625 percent is 3.25 times less risky than Parker Hannifin. It trades about 0.03 of its potential returns per unit of risk. Parker Hannifin is currently generating about -0.02 per unit of risk. If you would invest  9,445  in Centene 4625 percent on December 22, 2024 and sell it today you would earn a total of  83.00  from holding Centene 4625 percent or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Centene 4625 percent  vs.  Parker Hannifin

Centene 4625 percent

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centene 4625 percent are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Centene is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Centene and Parker Hannifin

The main advantage of trading using opposite Centene and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene 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.

The idea behind Centene 4625 percent and Parker Hannifin 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.