Correlation Between Parker Hannifin and CSW Industrials
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and CSW Industrials 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 CSW Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and CSW Industrials, you can compare the effects of market volatilities on Parker Hannifin and CSW Industrials 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 CSW Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and CSW Industrials.
Diversification Opportunities for Parker Hannifin and CSW Industrials
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Parker and CSW is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and CSW Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSW Industrials 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 CSW Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSW Industrials has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and CSW Industrials go up and down completely randomly.
Pair Corralation between Parker Hannifin and CSW Industrials
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.78 times more return on investment than CSW Industrials. However, Parker Hannifin is 1.28 times less risky than CSW Industrials. It trades about 0.15 of its potential returns per unit of risk. CSW Industrials is currently generating about -0.46 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. CSW Industrials
Performance |
| Timeline |
| Parker Hannifin |
| CSW Industrials |
Parker Hannifin and CSW Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and CSW Industrials
The main advantage of trading using opposite Parker Hannifin and CSW Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, CSW Industrials 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 CSW Industrials will offset losses from the drop in CSW Industrials' long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. ITT Inc | CSW Industrials vs. IDEX Corporation |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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