Correlation Between GE Aerospace and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both GE Aerospace 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 GE Aerospace and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Parker Hannifin, you can compare the effects of market volatilities on GE Aerospace 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 GE Aerospace with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Parker Hannifin.
Diversification Opportunities for GE Aerospace and Parker Hannifin
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GE Aerospace and Parker is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and GE Aerospace 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 GE Aerospace 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 GE Aerospace i.e., GE Aerospace and Parker Hannifin go up and down completely randomly.
Pair Corralation between GE Aerospace and Parker Hannifin
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.02 times more return on investment than Parker Hannifin. However, GE Aerospace is 1.02 times more volatile than Parker Hannifin. It trades about 0.15 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.12 per unit of risk. If you would invest 5,228 in GE Aerospace on August 24, 2024 and sell it today you would earn a total of 12,642 from holding GE Aerospace or generate 241.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Parker Hannifin
Performance |
| Timeline |
| GE Aerospace |
| Parker Hannifin |
GE Aerospace and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Parker Hannifin
The main advantage of trading using opposite GE Aerospace and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace 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.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Small Cap Core | GE Aerospace vs. Freedom Holding Corp | GE Aerospace vs. Gfl Environmental Holdings |
| 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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