Correlation Between Parker Hannifin and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and RCI Hospitality 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 RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and RCI Hospitality Holdings, you can compare the effects of market volatilities on Parker Hannifin and RCI Hospitality 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 RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and RCI Hospitality.
Diversification Opportunities for Parker Hannifin and RCI Hospitality
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Parker and RCI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and RCI Hospitality go up and down completely randomly.
Pair Corralation between Parker Hannifin and RCI Hospitality
Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the RCI Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Parker Hannifin is 1.98 times less risky than RCI Hospitality. The stock trades about -0.1 of its potential returns per unit of risk. The RCI Hospitality Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,106 in RCI Hospitality Holdings on September 13, 2024 and sell it today you would earn a total of 103.00 from holding RCI Hospitality Holdings or generate 2.02% 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. RCI Hospitality Holdings
Performance |
| Timeline |
| Parker Hannifin |
| RCI Hospitality Holdings |
Parker Hannifin and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and RCI Hospitality
The main advantage of trading using opposite Parker Hannifin and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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