Correlation Between FREEPORT and Parker Hannifin

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 525 and Parker Hannifin, you can compare the effects of market volatilities on FREEPORT 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 FREEPORT with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and Parker Hannifin.

Diversification Opportunities for FREEPORT and Parker Hannifin

0.03

Correlation Coefficient

FREEPORT  Parker Hannifin

Significant diversification

The 3 months correlation between FREEPORT and Parker is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 525 and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and FREEPORT 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 FREEPORT MCMORAN INC 525 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 FREEPORT i.e., FREEPORT and Parker Hannifin go up and down completely randomly.

Pair Corralation between FREEPORT and Parker Hannifin

Assuming the 90 days trading horizon FREEPORT MCMORAN INC 525 is expected to generate 0.4 times more return on investment than Parker Hannifin. However, FREEPORT MCMORAN INC 525 is 2.47 times less risky than Parker Hannifin. It trades about -0.11 of its potential returns per unit of risk. Parker Hannifin is currently generating about -0.4 per unit of risk. If you would invest  10,038  in FREEPORT MCMORAN INC 525 on September 26, 2024 and sell it today you would lose (106.00) from holding FREEPORT MCMORAN INC 525 or give up 1.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

FREEPORT MCMORAN INC 525  vs.  Parker Hannifin

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT 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

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 2 (%) 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.

Pair Trading with FREEPORT and Parker Hannifin

The main advantage of trading using opposite FREEPORT and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREEPORT 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 FREEPORT MCMORAN INC 525 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..