Correlation Between Parker Hannifin and Dover
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Dover 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 Dover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Dover, you can compare the effects of market volatilities on Parker Hannifin and Dover 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 Dover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Dover.
Diversification Opportunities for Parker Hannifin and Dover
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Parker and Dover is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Dover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dover 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 Dover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dover has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Dover go up and down completely randomly.
Pair Corralation between Parker Hannifin and Dover
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.2 times more return on investment than Dover. However, Parker Hannifin is 1.2 times more volatile than Dover. It trades about 0.12 of its potential returns per unit of risk. Dover is currently generating about 0.06 per unit of risk. If you would invest 28,248 in Parker Hannifin on August 27, 2024 and sell it today you would earn a total of 42,439 from holding Parker Hannifin or generate 150.24% 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. Dover
Performance |
| Timeline |
| Parker Hannifin |
| Dover |
Parker Hannifin and Dover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Dover
The main advantage of trading using opposite Parker Hannifin and Dover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Dover 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 Dover will offset losses from the drop in Dover's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Dover vs. Aquagold International | Dover vs. Morningstar Unconstrained Allocation | Dover vs. High Yield Municipal Fund | Dover vs. Thrivent High Yield |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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