Correlation Between Parker Hannifin and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and RBC Bearings 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 RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and RBC Bearings Incorporated, you can compare the effects of market volatilities on Parker Hannifin and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and RBC Bearings.
Diversification Opportunities for Parker Hannifin and RBC Bearings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parker and RBC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and RBC Bearings go up and down completely randomly.
Pair Corralation between Parker Hannifin and RBC Bearings
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.06 times more return on investment than RBC Bearings. However, Parker Hannifin is 1.06 times more volatile than RBC Bearings Incorporated. It trades about 0.09 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.08 per unit of risk. If you would invest 50,925 in Parker Hannifin on November 28, 2024 and sell it today you would earn a total of 14,792 from holding Parker Hannifin or generate 29.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Parker Hannifin |
| RBC Bearings |
Parker Hannifin and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and RBC Bearings
The main advantage of trading using opposite Parker Hannifin and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stocks Directory Find actively traded stocks across global markets |