Correlation Between Parker Hannifin and Generac Holdings
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Generac Holdings 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 Generac Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Generac Holdings, you can compare the effects of market volatilities on Parker Hannifin and Generac Holdings 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 Generac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Generac Holdings.
Diversification Opportunities for Parker Hannifin and Generac Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parker and Generac is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Generac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generac Holdings 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 Generac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generac Holdings has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Generac Holdings go up and down completely randomly.
Pair Corralation between Parker Hannifin and Generac Holdings
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.71 times more return on investment than Generac Holdings. However, Parker Hannifin is 1.4 times less risky than Generac Holdings. It trades about 0.14 of its potential returns per unit of risk. Generac Holdings is currently generating about 0.03 per unit of risk. If you would invest 57,399 in Parker Hannifin on November 2, 2024 and sell it today you would earn a total of 12,990 from holding Parker Hannifin or generate 22.63% 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. Generac Holdings
Performance |
| Timeline |
| Parker Hannifin |
| Generac Holdings |
Parker Hannifin and Generac Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Generac Holdings
The main advantage of trading using opposite Parker Hannifin and Generac Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Generac Holdings 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 Generac Holdings will offset losses from the drop in Generac Holdings' long position.| Parker Hannifin vs. Aquagold International | Parker Hannifin vs. Morningstar Unconstrained Allocation | Parker Hannifin vs. Thrivent High Yield | Parker Hannifin vs. High Yield Municipal Fund |
| Generac Holdings vs. Emerson Electric | Generac Holdings vs. Eaton PLC | Generac Holdings vs. Parker Hannifin | Generac Holdings vs. Illinois Tool Works |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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