Correlation Between Parker Hannifin and AMREP
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and AMREP 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 AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and AMREP, you can compare the effects of market volatilities on Parker Hannifin and AMREP 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 AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and AMREP.
Diversification Opportunities for Parker Hannifin and AMREP
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Parker and AMREP is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and AMREP go up and down completely randomly.
Pair Corralation between Parker Hannifin and AMREP
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 2.58 times less return on investment than AMREP. But when comparing it to its historical volatility, Parker Hannifin is 2.86 times less risky than AMREP. It trades about 0.23 of its potential returns per unit of risk. AMREP is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,210 in AMREP on September 2, 2024 and sell it today you would earn a total of 1,394 from holding AMREP or generate 63.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. AMREP
Performance |
| Timeline |
| Parker Hannifin |
| AMREP |
Parker Hannifin and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and AMREP
The main advantage of trading using opposite Parker Hannifin and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.The idea behind Parker Hannifin and AMREP 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.| AMREP vs. Landsea Homes Corp | AMREP vs. Forestar Group | AMREP vs. Five Point Holdings | AMREP vs. American Realty Investors |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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