Correlation Between Parker Hannifin and Life Time
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Life Time Group, you can compare the effects of market volatilities on Parker Hannifin and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Life Time.
Diversification Opportunities for Parker Hannifin and Life Time
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Parker and Life is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Life Time go up and down completely randomly.
Pair Corralation between Parker Hannifin and Life Time
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 2.31 times less return on investment than Life Time. But when comparing it to its historical volatility, Parker Hannifin is 1.14 times less risky than Life Time. It trades about 0.33 of its potential returns per unit of risk. Life Time Group is currently generating about 0.66 of returns per unit of risk over similar time horizon. If you would invest 2,279 in Life Time Group on November 4, 2024 and sell it today you would earn a total of 620.00 from holding Life Time Group or generate 27.2% 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. Life Time Group
Performance |
| Timeline |
| Parker Hannifin |
| Life Time Group |
Parker Hannifin and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Life Time
The main advantage of trading using opposite Parker Hannifin and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
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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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