Correlation Between Parker Hannifin and Xylem
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Xylem 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 Xylem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Xylem Inc, you can compare the effects of market volatilities on Parker Hannifin and Xylem 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 Xylem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Xylem.
Diversification Opportunities for Parker Hannifin and Xylem
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Parker and Xylem is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Xylem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xylem Inc 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 Xylem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xylem Inc has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Xylem go up and down completely randomly.
Pair Corralation between Parker Hannifin and Xylem
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.27 times more return on investment than Xylem. However, Parker Hannifin is 1.27 times more volatile than Xylem Inc. It trades about 0.1 of its potential returns per unit of risk. Xylem Inc is currently generating about 0.04 per unit of risk. If you would invest 33,983 in Parker Hannifin on August 27, 2024 and sell it today you would earn a total of 36,459 from holding Parker Hannifin or generate 107.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Xylem Inc
Performance |
| Timeline |
| Parker Hannifin |
| Xylem Inc |
Parker Hannifin and Xylem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Xylem
The main advantage of trading using opposite Parker Hannifin and Xylem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Xylem 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 Xylem will offset losses from the drop in Xylem's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Xylem vs. Aquagold International | Xylem vs. Morningstar Unconstrained Allocation | Xylem vs. High Yield Municipal Fund | Xylem vs. Thrivent High Yield |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets |