Correlation Between Parker Hannifin and Twin Disc
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Twin Disc 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 Twin Disc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Twin Disc Incorporated, you can compare the effects of market volatilities on Parker Hannifin and Twin Disc 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 Twin Disc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Twin Disc.
Diversification Opportunities for Parker Hannifin and Twin Disc
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parker and Twin is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Twin Disc Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twin Disc 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 Twin Disc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twin Disc has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Twin Disc go up and down completely randomly.
Pair Corralation between Parker Hannifin and Twin Disc
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.68 times more return on investment than Twin Disc. However, Parker Hannifin is 1.46 times less risky than Twin Disc. It trades about 0.18 of its potential returns per unit of risk. Twin Disc Incorporated is currently generating about -0.07 per unit of risk. If you would invest 62,389 in Parker Hannifin on August 25, 2024 and sell it today you would earn a total of 8,298 from holding Parker Hannifin or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Twin Disc Incorporated
Performance |
| Timeline |
| Parker Hannifin |
| Twin Disc |
Parker Hannifin and Twin Disc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Twin Disc
The main advantage of trading using opposite Parker Hannifin and Twin Disc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Twin Disc 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 Twin Disc will offset losses from the drop in Twin Disc'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 |
| Twin Disc vs. Standex International | Twin Disc vs. Intevac | Twin Disc vs. Thermon Group Holdings | Twin Disc vs. Enpro Industries |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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