Correlation Between Parker Hannifin and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Rockwell Automation 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 Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Rockwell Automation, you can compare the effects of market volatilities on Parker Hannifin and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Rockwell Automation.
Diversification Opportunities for Parker Hannifin and Rockwell Automation
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Parker and Rockwell is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Rockwell Automation go up and down completely randomly.
Pair Corralation between Parker Hannifin and Rockwell Automation
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.88 times more return on investment than Rockwell Automation. However, Parker Hannifin is 1.14 times less risky than Rockwell Automation. It trades about 0.12 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.03 per unit of risk. If you would invest 28,248 in Parker Hannifin on August 27, 2024 and sell it today you would earn a total of 42,439 from holding Parker Hannifin or generate 150.24% 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. Rockwell Automation
Performance |
| Timeline |
| Parker Hannifin |
| Rockwell Automation |
Parker Hannifin and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Rockwell Automation
The main advantage of trading using opposite Parker Hannifin and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
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..
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |