Correlation Between Consol Energy and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Consol Energy 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 Consol Energy and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Parker Hannifin, you can compare the effects of market volatilities on Consol Energy 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 Consol Energy with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Parker Hannifin.
Diversification Opportunities for Consol Energy and Parker Hannifin
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Consol and Parker is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Consol Energy 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 Consol Energy 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 Consol Energy i.e., Consol Energy and Parker Hannifin go up and down completely randomly.
Pair Corralation between Consol Energy and Parker Hannifin
Given the investment horizon of 90 days Consol Energy is expected to generate 1.08 times less return on investment than Parker Hannifin. In addition to that, Consol Energy is 1.32 times more volatile than Parker Hannifin. It trades about 0.09 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.13 per unit of volatility. If you would invest 52,880 in Parker Hannifin on August 29, 2024 and sell it today you would earn a total of 17,108 from holding Parker Hannifin or generate 32.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. Parker Hannifin
Performance |
| Timeline |
| Consol Energy |
| Parker Hannifin |
Consol Energy and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Parker Hannifin
The main advantage of trading using opposite Consol Energy and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy 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.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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