Correlation Between Parker Hannifin and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Schneider Electric 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 Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Schneider Electric SA, you can compare the effects of market volatilities on Parker Hannifin and Schneider Electric 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 Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Schneider Electric.
Diversification Opportunities for Parker Hannifin and Schneider Electric
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Parker and Schneider is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric 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 Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Schneider Electric go up and down completely randomly.
Pair Corralation between Parker Hannifin and Schneider Electric
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.13 times more return on investment than Schneider Electric. However, Parker Hannifin is 1.13 times more volatile than Schneider Electric SA. It trades about 0.13 of its potential returns per unit of risk. Schneider Electric SA is currently generating about 0.01 per unit of risk. If you would invest 52,880 in Parker Hannifin on August 29, 2024 and sell it today you would earn a total of 17,108 from holding Parker Hannifin or generate 32.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Schneider Electric SA
Performance |
| Timeline |
| Parker Hannifin |
| Schneider Electric |
Parker Hannifin and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Schneider Electric
The main advantage of trading using opposite Parker Hannifin and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Schneider Electric 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 Schneider Electric will offset losses from the drop in Schneider Electric's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
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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