Correlation Between Parker Hannifin and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Wartsila Oyj 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 Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Wartsila Oyj Abp, you can compare the effects of market volatilities on Parker Hannifin and Wartsila Oyj 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 Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Wartsila Oyj.
Diversification Opportunities for Parker Hannifin and Wartsila Oyj
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Parker and Wartsila is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp 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 Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Parker Hannifin and Wartsila Oyj
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.24 times more return on investment than Wartsila Oyj. However, Parker Hannifin is 4.13 times less risky than Wartsila Oyj. It trades about -0.25 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about -0.17 per unit of risk. If you would invest 70,815 in Parker Hannifin on September 12, 2024 and sell it today you would lose (3,022) from holding Parker Hannifin or give up 4.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Parker Hannifin |
| Wartsila Oyj Abp |
Parker Hannifin and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Wartsila Oyj
The main advantage of trading using opposite Parker Hannifin and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Wartsila Oyj 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Wartsila Oyj vs. Sandvik AB ADR | Wartsila Oyj vs. Rockwell Automation | Wartsila Oyj vs. Park Ohio Holdings | Wartsila Oyj vs. Gates Industrial |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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