Correlation Between Parker Hannifin and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Nabors Industries 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 Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Nabors Industries, you can compare the effects of market volatilities on Parker Hannifin and Nabors Industries 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 Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Nabors Industries.
Diversification Opportunities for Parker Hannifin and Nabors Industries
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Parker and Nabors is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries 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 Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Nabors Industries go up and down completely randomly.
Pair Corralation between Parker Hannifin and Nabors Industries
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.49 times more return on investment than Nabors Industries. However, Parker Hannifin is 2.06 times less risky than Nabors Industries. It trades about 0.11 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.03 per unit of risk. If you would invest 28,489 in Parker Hannifin on September 14, 2024 and sell it today you would earn a total of 39,768 from holding Parker Hannifin or generate 139.59% 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. Nabors Industries
Performance |
| Timeline |
| Parker Hannifin |
| Nabors Industries |
Parker Hannifin and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Nabors Industries
The main advantage of trading using opposite Parker Hannifin and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Nabors Industries 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 Nabors Industries will offset losses from the drop in Nabors Industries' long position.| Parker Hannifin vs. Hurco Companies | Parker Hannifin vs. Enerpac Tool Group | Parker Hannifin vs. China Yuchai International | Parker Hannifin vs. Luxfer Holdings PLC |
| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Noble plc | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Sable Offshore Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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