Correlation Between Parker Hannifin and Tennant
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Tennant 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 Tennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Tennant Company, you can compare the effects of market volatilities on Parker Hannifin and Tennant 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 Tennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Tennant.
Diversification Opportunities for Parker Hannifin and Tennant
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Parker and Tennant is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Tennant go up and down completely randomly.
Pair Corralation between Parker Hannifin and Tennant
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.94 times more return on investment than Tennant. However, Parker Hannifin is 1.06 times less risky than Tennant. It trades about 0.12 of its potential returns per unit of risk. Tennant Company is currently generating about 0.05 per unit of risk. If you would invest 28,184 in Parker Hannifin on August 30, 2024 and sell it today you would earn a total of 41,804 from holding Parker Hannifin or generate 148.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Parker Hannifin vs. Tennant Company
Performance |
| Timeline |
| Parker Hannifin |
| Tennant Company |
Parker Hannifin and Tennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Tennant
The main advantage of trading using opposite Parker Hannifin and Tennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Tennant 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 Tennant will offset losses from the drop in Tennant's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Tennant vs. Franklin Electric Co | Tennant vs. Omega Flex | Tennant vs. Luxfer Holdings PLC | Tennant vs. Kadant 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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