Correlation Between Parker Hannifin and Enpro Industries
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Enpro 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 Enpro 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 Enpro Industries, you can compare the effects of market volatilities on Parker Hannifin and Enpro 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 Enpro Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Enpro Industries.
Diversification Opportunities for Parker Hannifin and Enpro Industries
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Parker and Enpro is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro 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 Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Enpro Industries go up and down completely randomly.
Pair Corralation between Parker Hannifin and Enpro Industries
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.76 times more return on investment than Enpro Industries. However, Parker Hannifin is 1.31 times less risky than Enpro Industries. It trades about 0.1 of its potential returns per unit of risk. Enpro Industries is currently generating about 0.06 per unit of risk. If you would invest 45,573 in Parker Hannifin on November 9, 2024 and sell it today you would earn a total of 23,587 from holding Parker Hannifin or generate 51.76% 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. Enpro Industries
Performance |
| Timeline |
| Parker Hannifin |
| Enpro Industries |
Parker Hannifin and Enpro Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Enpro Industries
The main advantage of trading using opposite Parker Hannifin and Enpro Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Enpro 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 Enpro Industries will offset losses from the drop in Enpro Industries' long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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