Correlation Between New Residential and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both New Residential 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 New Residential and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Parker Hannifin, you can compare the effects of market volatilities on New Residential 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 New Residential with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Parker Hannifin.
Diversification Opportunities for New Residential and Parker Hannifin
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Parker is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and New Residential 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 New Residential Investment 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 New Residential i.e., New Residential and Parker Hannifin go up and down completely randomly.
Pair Corralation between New Residential and Parker Hannifin
Assuming the 90 days trading horizon New Residential is expected to generate 1.83 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, New Residential Investment is 1.46 times less risky than Parker Hannifin. It trades about 0.08 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 26,555 in Parker Hannifin on September 12, 2024 and sell it today you would earn a total of 39,385 from holding Parker Hannifin or generate 148.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Parker Hannifin
Performance |
| Timeline |
| New Residential Inve |
| Parker Hannifin |
New Residential and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Parker Hannifin
The main advantage of trading using opposite New Residential and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential 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.| New Residential vs. PKSHA TECHNOLOGY INC | New Residential vs. FARO Technologies | New Residential vs. CI GAMES SA | New Residential vs. EAST SIDE GAMES |
| Parker Hannifin vs. Schneider Electric SE | Parker Hannifin vs. Superior Plus Corp | Parker Hannifin vs. SIVERS SEMICONDUCTORS AB | Parker Hannifin vs. Norsk Hydro ASA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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