Correlation Between Parker Hannifin and Eastern
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Eastern 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 Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Eastern Co, you can compare the effects of market volatilities on Parker Hannifin and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Eastern.
Diversification Opportunities for Parker Hannifin and Eastern
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parker and Eastern is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Eastern go up and down completely randomly.
Pair Corralation between Parker Hannifin and Eastern
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.81 times more return on investment than Eastern. However, Parker Hannifin is 1.23 times less risky than Eastern. It trades about 0.26 of its potential returns per unit of risk. Eastern Co is currently generating about -0.18 per unit of risk. If you would invest 62,218 in Parker Hannifin on August 29, 2024 and sell it today you would earn a total of 8,100 from holding Parker Hannifin or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Eastern Co
Performance |
| Timeline |
| Parker Hannifin |
| Eastern |
Parker Hannifin and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Eastern
The main advantage of trading using opposite Parker Hannifin and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. AB SKF | Eastern vs. Kennametal |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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