Correlation Between Parker Hannifin and Barnes
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Barnes 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 Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Barnes Group, you can compare the effects of market volatilities on Parker Hannifin and Barnes 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 Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Barnes.
Diversification Opportunities for Parker Hannifin and Barnes
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parker and Barnes is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group 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 Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Barnes go up and down completely randomly.
Pair Corralation between Parker Hannifin and Barnes
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 20.45 times more return on investment than Barnes. However, Parker Hannifin is 20.45 times more volatile than Barnes Group. It trades about 0.15 of its potential returns per unit of risk. Barnes Group is currently generating about 0.76 per unit of risk. If you would invest 66,788 in Parker Hannifin on November 18, 2024 and sell it today you would earn a total of 3,237 from holding Parker Hannifin or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.57% |
| Values | Daily Returns |
Parker Hannifin vs. Barnes Group
Performance |
| Timeline |
| Parker Hannifin |
| Barnes Group |
Risk-Adjusted Performance
Very Strong
Weak | Strong |
Parker Hannifin and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Barnes
The main advantage of trading using opposite Parker Hannifin and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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