Correlation Between Parker Hannifin and Logan Ridge
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Logan Ridge 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 Logan Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Logan Ridge Finance, you can compare the effects of market volatilities on Parker Hannifin and Logan Ridge 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 Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Logan Ridge.
Diversification Opportunities for Parker Hannifin and Logan Ridge
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Parker and Logan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance 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 Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Logan Ridge go up and down completely randomly.
Pair Corralation between Parker Hannifin and Logan Ridge
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.38 times more return on investment than Logan Ridge. However, Parker Hannifin is 1.38 times more volatile than Logan Ridge Finance. It trades about 0.14 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about 0.1 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Logan Ridge Finance
Performance |
| Timeline |
| Parker Hannifin |
| Logan Ridge Finance |
Parker Hannifin and Logan Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Logan Ridge
The main advantage of trading using opposite Parker Hannifin and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Logan Ridge 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 Logan Ridge will offset losses from the drop in Logan Ridge's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Logan Ridge vs. Badger Infrastructure Solutions | Logan Ridge vs. Portman Ridge Finance | Logan Ridge vs. Inotiv Inc | Logan Ridge vs. Phenixfin |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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