Correlation Between Parker Hannifin and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Sandvik AB 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 Sandvik AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Sandvik AB ADR, you can compare the effects of market volatilities on Parker Hannifin and Sandvik AB 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 Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Sandvik AB.
Diversification Opportunities for Parker Hannifin and Sandvik AB
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parker and Sandvik is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Sandvik AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB ADR 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 Sandvik AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandvik AB ADR has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Sandvik AB go up and down completely randomly.
Pair Corralation between Parker Hannifin and Sandvik AB
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.14 times more return on investment than Sandvik AB. However, Parker Hannifin is 1.14 times more volatile than Sandvik AB ADR. It trades about 0.27 of its potential returns per unit of risk. Sandvik AB ADR is currently generating about -0.17 per unit of risk. If you would invest 62,267 in Parker Hannifin on August 25, 2024 and sell it today you would earn a total of 8,420 from holding Parker Hannifin or generate 13.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Sandvik AB ADR
Performance |
| Timeline |
| Parker Hannifin |
| Sandvik AB ADR |
Parker Hannifin and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Sandvik AB
The main advantage of trading using opposite Parker Hannifin and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Sandvik AB 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 Sandvik AB will offset losses from the drop in Sandvik AB'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 |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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