Correlation Between Parker Hannifin and McPhy Energy
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and McPhy Energy 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 Parker Hannifin and McPhy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and McPhy Energy SA, you can compare the effects of market volatilities on Parker Hannifin and McPhy Energy 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 Parker Hannifin with a short position of McPhy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and McPhy Energy.
Diversification Opportunities for Parker Hannifin and McPhy Energy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parker and McPhy is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and McPhy Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McPhy Energy SA and Parker Hannifin 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 Parker Hannifin are associated (or correlated) with McPhy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McPhy Energy SA has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and McPhy Energy go up and down completely randomly.
Pair Corralation between Parker Hannifin and McPhy Energy
Assuming the 90 days horizon Parker Hannifin is expected to generate 0.44 times more return on investment than McPhy Energy. However, Parker Hannifin is 2.28 times less risky than McPhy Energy. It trades about 0.08 of its potential returns per unit of risk. McPhy Energy SA is currently generating about -0.1 per unit of risk. If you would invest 33,250 in Parker Hannifin on November 28, 2024 and sell it today you would earn a total of 30,130 from holding Parker Hannifin or generate 90.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Parker Hannifin vs. McPhy Energy SA
Performance |
| Timeline |
| Parker Hannifin |
| McPhy Energy SA |
Parker Hannifin and McPhy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and McPhy Energy
The main advantage of trading using opposite Parker Hannifin and McPhy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, McPhy Energy 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 McPhy Energy will offset losses from the drop in McPhy Energy's long position.| Parker Hannifin vs. INSURANCE AUST GRP | Parker Hannifin vs. SBI Insurance Group | Parker Hannifin vs. CHINA EDUCATION GROUP | Parker Hannifin vs. QBE Insurance Group |
| McPhy Energy vs. AUTO TRADER ADR | McPhy Energy vs. TRADELINK ELECTRON | McPhy Energy vs. KENEDIX OFFICE INV | McPhy Energy vs. Tradegate AG Wertpapierhandelsbank |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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