Correlation Between Parker Hannifin and Xinjiang Goldwind
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Xinjiang Goldwind 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 Xinjiang Goldwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Parker Hannifin and Xinjiang Goldwind 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 Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Xinjiang Goldwind.
Diversification Opportunities for Parker Hannifin and Xinjiang Goldwind
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parker and Xinjiang is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science 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 Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Xinjiang Goldwind go up and down completely randomly.
Pair Corralation between Parker Hannifin and Xinjiang Goldwind
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.92 times more return on investment than Xinjiang Goldwind. However, Parker Hannifin is 1.09 times less risky than Xinjiang Goldwind. It trades about 0.24 of its potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about -0.09 per unit of risk. If you would invest 63,257 in Parker Hannifin on September 1, 2024 and sell it today you would earn a total of 7,033 from holding Parker Hannifin or generate 11.12% 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. Xinjiang Goldwind Science
Performance |
| Timeline |
| Parker Hannifin |
| Xinjiang Goldwind Science |
Parker Hannifin and Xinjiang Goldwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Xinjiang Goldwind
The main advantage of trading using opposite Parker Hannifin and Xinjiang Goldwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Xinjiang Goldwind 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 Xinjiang Goldwind will offset losses from the drop in Xinjiang Goldwind's long position.The idea behind Parker Hannifin and Xinjiang Goldwind Science pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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