Correlation Between Parker Hannifin and Chemours
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Chemours Co, you can compare the effects of market volatilities on Parker Hannifin and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Chemours.
Diversification Opportunities for Parker Hannifin and Chemours
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parker and Chemours is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Chemours go up and down completely randomly.
Pair Corralation between Parker Hannifin and Chemours
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.75 times more return on investment than Chemours. However, Parker Hannifin is 1.34 times less risky than Chemours. It trades about 0.23 of its potential returns per unit of risk. Chemours Co is currently generating about 0.11 per unit of risk. If you would invest 64,150 in Parker Hannifin on November 9, 2024 and sell it today you would earn a total of 5,010 from holding Parker Hannifin or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Chemours Co
Performance |
| Timeline |
| Parker Hannifin |
| Chemours |
Parker Hannifin and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Chemours
The main advantage of trading using opposite Parker Hannifin and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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