Correlation Between Next Hydrogen and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Next Hydrogen 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 Next Hydrogen and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Hydrogen Solutions and Parker Hannifin, you can compare the effects of market volatilities on Next Hydrogen 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 Next Hydrogen with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Hydrogen and Parker Hannifin.
Diversification Opportunities for Next Hydrogen and Parker Hannifin
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Next and Parker is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Next Hydrogen Solutions and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Next Hydrogen 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 Next Hydrogen Solutions 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 Next Hydrogen i.e., Next Hydrogen and Parker Hannifin go up and down completely randomly.
Pair Corralation between Next Hydrogen and Parker Hannifin
Assuming the 90 days horizon Next Hydrogen Solutions is expected to generate 6.89 times more return on investment than Parker Hannifin. However, Next Hydrogen is 6.89 times more volatile than Parker Hannifin. It trades about 0.13 of its potential returns per unit of risk. Parker Hannifin is currently generating about -0.04 per unit of risk. If you would invest 40.00 in Next Hydrogen Solutions on December 11, 2024 and sell it today you would earn a total of 19.00 from holding Next Hydrogen Solutions or generate 47.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Hydrogen Solutions vs. Parker Hannifin
Performance |
| Timeline |
| Next Hydrogen Solutions |
| Parker Hannifin |
Next Hydrogen and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Hydrogen and Parker Hannifin
The main advantage of trading using opposite Next Hydrogen and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Hydrogen 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.| Next Hydrogen vs. Weir Group PLC | Next Hydrogen vs. Greenshift Corp | Next Hydrogen vs. Quality Industrial Corp | Next Hydrogen vs. ITM Power Plc |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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