Correlation Between ChampionX and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both ChampionX 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 ChampionX and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChampionX and Parker Hannifin, you can compare the effects of market volatilities on ChampionX 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 ChampionX with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Parker Hannifin.
Diversification Opportunities for ChampionX and Parker Hannifin
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ChampionX and Parker is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and ChampionX 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 ChampionX 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 ChampionX i.e., ChampionX and Parker Hannifin go up and down completely randomly.
Pair Corralation between ChampionX and Parker Hannifin
Considering the 90-day investment horizon ChampionX is expected to generate 2.06 times less return on investment than Parker Hannifin. In addition to that, ChampionX is 1.48 times more volatile than Parker Hannifin. It trades about 0.11 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.33 per unit of volatility. If you would invest 63,768 in Parker Hannifin on November 4, 2024 and sell it today you would earn a total of 6,937 from holding Parker Hannifin or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChampionX vs. Parker Hannifin
Performance |
| Timeline |
| ChampionX |
| Parker Hannifin |
ChampionX and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChampionX and Parker Hannifin
The main advantage of trading using opposite ChampionX and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX 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.| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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