Correlation Between Barnes and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Barnes 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 Barnes and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Parker Hannifin, you can compare the effects of market volatilities on Barnes 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 Barnes with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Parker Hannifin.
Diversification Opportunities for Barnes and Parker Hannifin
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barnes and Parker is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Barnes 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 Barnes 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 Barnes i.e., Barnes and Parker Hannifin go up and down completely randomly.
Pair Corralation between Barnes and Parker Hannifin
Taking into account the 90-day investment horizon Barnes is expected to generate 5.75 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, Barnes Group is 13.93 times less risky than Parker Hannifin. It trades about 0.41 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 65,257 in Parker Hannifin on October 25, 2024 and sell it today you would earn a total of 2,192 from holding Parker Hannifin or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Parker Hannifin
Performance |
| Timeline |
| Barnes Group |
| Parker Hannifin |
Barnes and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Parker Hannifin
The main advantage of trading using opposite Barnes and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes 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.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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