Correlation Between Parker Hannifin and Weir Group
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Weir Group 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 Weir Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Weir Group PLC, you can compare the effects of market volatilities on Parker Hannifin and Weir Group 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 Weir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Weir Group.
Diversification Opportunities for Parker Hannifin and Weir Group
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Parker and Weir is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Weir Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group PLC 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 Weir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group PLC has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Weir Group go up and down completely randomly.
Pair Corralation between Parker Hannifin and Weir Group
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.01 times more return on investment than Weir Group. However, Parker Hannifin is 1.01 times more volatile than Weir Group PLC. It trades about 0.11 of its potential returns per unit of risk. Weir Group PLC is currently generating about 0.05 per unit of risk. If you would invest 30,734 in Parker Hannifin on November 27, 2024 and sell it today you would earn a total of 35,174 from holding Parker Hannifin or generate 114.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.6% |
| Values | Daily Returns |
Parker Hannifin vs. Weir Group PLC
Performance |
| Timeline |
| Parker Hannifin |
| Weir Group PLC |
Parker Hannifin and Weir Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Weir Group
The main advantage of trading using opposite Parker Hannifin and Weir Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Weir Group 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 Weir Group will offset losses from the drop in Weir Group's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Weir Group vs. Greenshift Corp | Weir Group vs. Next Hydrogen Solutions | Weir Group vs. Quality Industrial Corp | Weir Group vs. Titan Logix Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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