Correlation Between Park Ohio and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Park Ohio and Parker Hannifin 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 Park Ohio and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Parker Hannifin, you can compare the effects of market volatilities on Park Ohio and Parker Hannifin 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 Park Ohio with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Parker Hannifin.
Diversification Opportunities for Park Ohio and Parker Hannifin
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Park and Parker is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Park Ohio 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 Park Ohio Holdings are associated (or correlated) with Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Park Ohio i.e., Park Ohio and Parker Hannifin go up and down completely randomly.
Pair Corralation between Park Ohio and Parker Hannifin
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 1.76 times more return on investment than Parker Hannifin. However, Park Ohio is 1.76 times more volatile than Parker Hannifin. It trades about 0.08 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.12 per unit of risk. If you would invest 1,217 in Park Ohio Holdings on August 27, 2024 and sell it today you would earn a total of 2,087 from holding Park Ohio Holdings or generate 171.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Parker Hannifin
Performance |
| Timeline |
| Park Ohio Holdings |
| Parker Hannifin |
Park Ohio and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Parker Hannifin
The main advantage of trading using opposite Park Ohio and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.| Park Ohio vs. Aquagold International | Park Ohio vs. Morningstar Unconstrained Allocation | Park Ohio vs. High Yield Municipal Fund | Park Ohio vs. Thrivent High Yield |
| Parker Hannifin vs. Aquagold International | Parker Hannifin vs. Morningstar Unconstrained Allocation | Parker Hannifin vs. High Yield Municipal Fund | Parker Hannifin 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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