Correlation Between Parker Hannifin and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and WEC Energy 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 WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and WEC Energy Group, you can compare the effects of market volatilities on Parker Hannifin and WEC Energy 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 WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and WEC Energy.
Diversification Opportunities for Parker Hannifin and WEC Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parker and WEC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy Group 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 WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and WEC Energy go up and down completely randomly.
Pair Corralation between Parker Hannifin and WEC Energy
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.43 times more return on investment than WEC Energy. However, Parker Hannifin is 1.43 times more volatile than WEC Energy Group. It trades about 0.12 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.05 per unit of risk. If you would invest 34,939 in Parker Hannifin on August 31, 2024 and sell it today you would earn a total of 35,351 from holding Parker Hannifin or generate 101.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. WEC Energy Group
Performance |
| Timeline |
| Parker Hannifin |
| WEC Energy Group |
Parker Hannifin and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and WEC Energy
The main advantage of trading using opposite Parker Hannifin and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, WEC Energy 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 WEC Energy will offset losses from the drop in WEC Energy's long position.| Parker Hannifin vs. Standex International | Parker Hannifin vs. Donaldson | Parker Hannifin vs. CSW Industrials | Parker Hannifin vs. Franklin Electric Co |
| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |