Correlation Between Parker Hannifin and Fidus Investment
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Fidus Investment 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 Fidus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Fidus Investment Corp, you can compare the effects of market volatilities on Parker Hannifin and Fidus Investment 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 Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Fidus Investment.
Diversification Opportunities for Parker Hannifin and Fidus Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Parker and Fidus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Fidus Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidus Investment Corp 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 Fidus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidus Investment Corp has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Fidus Investment go up and down completely randomly.
Pair Corralation between Parker Hannifin and Fidus Investment
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 2.01 times more return on investment than Fidus Investment. However, Parker Hannifin is 2.01 times more volatile than Fidus Investment Corp. It trades about 0.11 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.1 per unit of risk. If you would invest 36,512 in Parker Hannifin on September 12, 2024 and sell it today you would earn a total of 31,281 from holding Parker Hannifin or generate 85.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Fidus Investment Corp
Performance |
| Timeline |
| Parker Hannifin |
| Fidus Investment Corp |
Parker Hannifin and Fidus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Fidus Investment
The main advantage of trading using opposite Parker Hannifin and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Fidus Investment 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 Fidus Investment will offset losses from the drop in Fidus Investment's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Fidus Investment vs. Gladstone Investment | Fidus Investment vs. Horizon Technology Finance | Fidus Investment vs. Stellus Capital Investment | Fidus Investment vs. Prospect Capital |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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