Correlation Between Parker Hannifin and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and SBM Offshore 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 SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and SBM Offshore NV, you can compare the effects of market volatilities on Parker Hannifin and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and SBM Offshore.
Diversification Opportunities for Parker Hannifin and SBM Offshore
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parker and SBM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and SBM Offshore go up and down completely randomly.
Pair Corralation between Parker Hannifin and SBM Offshore
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.21 times less return on investment than SBM Offshore. But when comparing it to its historical volatility, Parker Hannifin is 1.39 times less risky than SBM Offshore. It trades about 0.13 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,211 in SBM Offshore NV on August 26, 2024 and sell it today you would earn a total of 669.00 from holding SBM Offshore NV or generate 55.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.5% |
| Values | Daily Returns |
Parker Hannifin vs. SBM Offshore NV
Performance |
| Timeline |
| Parker Hannifin |
| SBM Offshore NV |
Parker Hannifin and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and SBM Offshore
The main advantage of trading using opposite Parker Hannifin and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| Parker Hannifin vs. Aquagold International | Parker Hannifin vs. Morningstar Unconstrained Allocation | Parker Hannifin vs. High Yield Municipal Fund | Parker Hannifin vs. Thrivent High Yield |
| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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