Correlation Between Parker Hannifin and Lipocine
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Lipocine 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 Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Lipocine, you can compare the effects of market volatilities on Parker Hannifin and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Lipocine.
Diversification Opportunities for Parker Hannifin and Lipocine
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Parker and Lipocine is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Lipocine go up and down completely randomly.
Pair Corralation between Parker Hannifin and Lipocine
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.3 times more return on investment than Lipocine. However, Parker Hannifin is 3.29 times less risky than Lipocine. It trades about 0.14 of its potential returns per unit of risk. Lipocine is currently generating about -0.02 per unit of risk. If you would invest 52,052 in Parker Hannifin on September 3, 2024 and sell it today you would earn a total of 18,238 from holding Parker Hannifin or generate 35.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Lipocine
Performance |
| Timeline |
| Parker Hannifin |
| Lipocine |
Parker Hannifin and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Lipocine
The main advantage of trading using opposite Parker Hannifin and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Lipocine 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 Lipocine will offset losses from the drop in Lipocine's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Lipocine vs. DiaMedica Therapeutics | Lipocine vs. Lyra Therapeutics | Lipocine vs. Centessa Pharmaceuticals PLC |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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