Correlation Between NYSE Composite and PARKER

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Can any of the company-specific risk be diversified away by investing in both NYSE Composite and PARKER 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 NYSE Composite and PARKER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and PARKER HANNIFIN P MEDIUM, you can compare the effects of market volatilities on NYSE Composite and PARKER 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 NYSE Composite with a short position of PARKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and PARKER.

Diversification Opportunities for NYSE Composite and PARKER

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between NYSE and PARKER is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and PARKER HANNIFIN P MEDIUM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKER HANNIFIN P and NYSE Composite 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 NYSE Composite are associated (or correlated) with PARKER. 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 P has no effect on the direction of NYSE Composite i.e., NYSE Composite and PARKER go up and down completely randomly.
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Pair Corralation between NYSE Composite and PARKER

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.63 times more return on investment than PARKER. However, NYSE Composite is 1.58 times less risky than PARKER. It trades about 0.12 of its potential returns per unit of risk. PARKER HANNIFIN P MEDIUM is currently generating about -0.18 per unit of risk. If you would invest  1,912,150  in NYSE Composite on September 13, 2024 and sell it today you would earn a total of  76,953  from holding NYSE Composite or generate 4.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy84.13%
ValuesDaily Returns

NYSE Composite  vs.  PARKER HANNIFIN P MEDIUM

 Performance 
       Timeline  

NYSE Composite and PARKER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NYSE Composite and PARKER

The main advantage of trading using opposite NYSE Composite and PARKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, PARKER 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 will offset losses from the drop in PARKER's long position.
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The idea behind NYSE Composite and PARKER HANNIFIN P MEDIUM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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