Correlation Between Parker Hannifin and Wendys
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Wendys 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 Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and The Wendys Co, you can compare the effects of market volatilities on Parker Hannifin and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Wendys.
Diversification Opportunities for Parker Hannifin and Wendys
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Parker and Wendys is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Wendys go up and down completely randomly.
Pair Corralation between Parker Hannifin and Wendys
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.75 times more return on investment than Wendys. However, Parker Hannifin is 1.33 times less risky than Wendys. It trades about -0.1 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.15 per unit of risk. If you would invest 69,932 in Parker Hannifin on September 13, 2024 and sell it today you would lose (1,293) from holding Parker Hannifin or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. The Wendys Co
Performance |
| Timeline |
| Parker Hannifin |
| The Wendys |
Parker Hannifin and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Wendys
The main advantage of trading using opposite Parker Hannifin and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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