Correlation Between Illinois Tool and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Illinois Tool 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 Illinois Tool and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Illinois Tool Works and Parker Hannifin, you can compare the effects of market volatilities on Illinois Tool 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 Illinois Tool with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Parker Hannifin.
Diversification Opportunities for Illinois Tool and Parker Hannifin
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Illinois and Parker is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Illinois Tool 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 Illinois Tool Works 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 Illinois Tool i.e., Illinois Tool and Parker Hannifin go up and down completely randomly.
Pair Corralation between Illinois Tool and Parker Hannifin
Considering the 90-day investment horizon Illinois Tool is expected to generate 2.2 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, Illinois Tool Works is 1.7 times less risky than Parker Hannifin. It trades about 0.19 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 62,821 in Parker Hannifin on August 24, 2024 and sell it today you would earn a total of 7,447 from holding Parker Hannifin or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Parker Hannifin
Performance |
| Timeline |
| Illinois Tool Works |
| Parker Hannifin |
Illinois Tool and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Parker Hannifin
The main advantage of trading using opposite Illinois Tool and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool 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.| Illinois Tool vs. Small Cap Core | Illinois Tool vs. Freedom Holding Corp | Illinois Tool vs. Gfl Environmental Holdings | Illinois Tool vs. Growth Fund Of |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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