Correlation Between Eastern and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Parker Hannifin, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Parker Hannifin.
Diversification Opportunities for Eastern and Parker Hannifin
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastern and Parker is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Parker Hannifin go up and down completely randomly.
Pair Corralation between Eastern and Parker Hannifin
Considering the 90-day investment horizon Eastern Co is expected to under-perform the Parker Hannifin. In addition to that, Eastern is 1.3 times more volatile than Parker Hannifin. It trades about -0.18 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.27 per unit of volatility. If you would invest 62,267 in Parker Hannifin on August 25, 2024 and sell it today you would earn a total of 8,420 from holding Parker Hannifin or generate 13.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Parker Hannifin
Performance |
| Timeline |
| Eastern |
| Parker Hannifin |
Eastern and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Parker Hannifin
The main advantage of trading using opposite Eastern and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| Parker Hannifin vs. Aquagold International | Parker Hannifin vs. Morningstar Unconstrained Allocation | Parker Hannifin vs. High Yield Municipal Fund | Parker Hannifin vs. Thrivent High Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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