Correlation Between Ametek and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Ametek 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 Ametek and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ametek Inc and Parker Hannifin, you can compare the effects of market volatilities on Ametek 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 Ametek with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ametek and Parker Hannifin.
Diversification Opportunities for Ametek and Parker Hannifin
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ametek and Parker is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Ametek 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 Ametek Inc 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 Ametek i.e., Ametek and Parker Hannifin go up and down completely randomly.
Pair Corralation between Ametek and Parker Hannifin
Considering the 90-day investment horizon Ametek Inc is expected to generate 1.01 times more return on investment than Parker Hannifin. However, Ametek is 1.01 times more volatile than Parker Hannifin. It trades about 0.35 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.28 per unit of risk. If you would invest 16,805 in Ametek Inc on August 28, 2024 and sell it today you would earn a total of 2,907 from holding Ametek Inc or generate 17.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ametek Inc vs. Parker Hannifin
Performance |
| Timeline |
| Ametek Inc |
| Parker Hannifin |
Ametek and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ametek and Parker Hannifin
The main advantage of trading using opposite Ametek and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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 Ametek Inc 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.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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