Correlation Between PennantPark Floating and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating 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 PennantPark Floating and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Floating Rate and Parker Hannifin, you can compare the effects of market volatilities on PennantPark Floating 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 PennantPark Floating with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Parker Hannifin.
Diversification Opportunities for PennantPark Floating and Parker Hannifin
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennantPark and Parker is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and PennantPark Floating 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 PennantPark Floating Rate 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 PennantPark Floating i.e., PennantPark Floating and Parker Hannifin go up and down completely randomly.
Pair Corralation between PennantPark Floating and Parker Hannifin
Given the investment horizon of 90 days PennantPark Floating is expected to generate 6.81 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.88 times less risky than Parker Hannifin. It trades about 0.03 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 43,345 in Parker Hannifin on September 4, 2024 and sell it today you would earn a total of 26,724 from holding Parker Hannifin or generate 61.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Parker Hannifin
Performance |
| Timeline |
| PennantPark Floating Rate |
| Parker Hannifin |
PennantPark Floating and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Parker Hannifin
The main advantage of trading using opposite PennantPark Floating and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating 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.| PennantPark Floating vs. Visa Class A | PennantPark Floating vs. Diamond Hill Investment | PennantPark Floating vs. Associated Capital Group | PennantPark Floating vs. Brookfield Corp |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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