Correlation Between Parker Hannifin and Western Copper
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Western Copper 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 Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Western Copper and, you can compare the effects of market volatilities on Parker Hannifin and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Western Copper.
Diversification Opportunities for Parker Hannifin and Western Copper
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Parker and Western is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Western Copper go up and down completely randomly.
Pair Corralation between Parker Hannifin and Western Copper
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.55 times more return on investment than Western Copper. However, Parker Hannifin is 1.83 times less risky than Western Copper. It trades about 0.12 of its potential returns per unit of risk. Western Copper and is currently generating about -0.01 per unit of risk. If you would invest 28,518 in Parker Hannifin on August 26, 2024 and sell it today you would earn a total of 42,169 from holding Parker Hannifin or generate 147.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Western Copper and
Performance |
| Timeline |
| Parker Hannifin |
| Western Copper |
Parker Hannifin and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Western Copper
The main advantage of trading using opposite Parker Hannifin and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper'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 |
| Western Copper vs. Vale SA ADR | Western Copper vs. Teck Resources Ltd | Western Copper vs. MP Materials Corp | Western Copper vs. BHP Group Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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