Correlation Between Century Aluminum and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Century Aluminum 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 Century Aluminum and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Parker Hannifin, you can compare the effects of market volatilities on Century Aluminum 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 Century Aluminum with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Parker Hannifin.
Diversification Opportunities for Century Aluminum and Parker Hannifin
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Century and Parker is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Century Aluminum 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 Century Aluminum 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 Century Aluminum i.e., Century Aluminum and Parker Hannifin go up and down completely randomly.
Pair Corralation between Century Aluminum and Parker Hannifin
Given the investment horizon of 90 days Century Aluminum is expected to generate 2.36 times more return on investment than Parker Hannifin. However, Century Aluminum is 2.36 times more volatile than Parker Hannifin. It trades about 0.07 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.12 per unit of risk. If you would invest 818.00 in Century Aluminum on August 24, 2024 and sell it today you would earn a total of 1,431 from holding Century Aluminum or generate 174.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. Parker Hannifin
Performance |
| Timeline |
| Century Aluminum |
| Parker Hannifin |
Century Aluminum and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Parker Hannifin
The main advantage of trading using opposite Century Aluminum and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum 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.| Century Aluminum vs. Eshallgo Class A | Century Aluminum vs. Amtech Systems | Century Aluminum vs. Gold Fields Ltd | Century Aluminum vs. Aegean Airlines SA |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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