Correlation Between Parker Hannifin and Xtant Medical
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Xtant Medical 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 Xtant Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Xtant Medical Holdings, you can compare the effects of market volatilities on Parker Hannifin and Xtant Medical 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 Xtant Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Xtant Medical.
Diversification Opportunities for Parker Hannifin and Xtant Medical
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Parker and Xtant is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Xtant Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtant Medical Holdings 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 Xtant Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtant Medical Holdings has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Xtant Medical go up and down completely randomly.
Pair Corralation between Parker Hannifin and Xtant Medical
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.35 times more return on investment than Xtant Medical. However, Parker Hannifin is 2.87 times less risky than Xtant Medical. It trades about 0.12 of its potential returns per unit of risk. Xtant Medical Holdings is currently generating about 0.01 per unit of risk. If you would invest 28,808 in Parker Hannifin on September 2, 2024 and sell it today you would earn a total of 41,482 from holding Parker Hannifin or generate 143.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Xtant Medical Holdings
Performance |
| Timeline |
| Parker Hannifin |
| Xtant Medical Holdings |
Parker Hannifin and Xtant Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Xtant Medical
The main advantage of trading using opposite Parker Hannifin and Xtant Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Xtant Medical 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 Xtant Medical will offset losses from the drop in Xtant Medical's long position.The idea behind Parker Hannifin and Xtant Medical Holdings 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.| Xtant Medical vs. Neuropace | Xtant Medical vs. Electromed | Xtant Medical vs. Orthopediatrics Corp | Xtant Medical vs. SurModics |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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