Correlation Between Safety Insurance and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Safety Insurance 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 Safety Insurance and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and Parker Hannifin, you can compare the effects of market volatilities on Safety Insurance 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 Safety Insurance with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Parker Hannifin.
Diversification Opportunities for Safety Insurance and Parker Hannifin
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Safety and Parker is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Safety Insurance 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 Safety Insurance Group 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 Safety Insurance i.e., Safety Insurance and Parker Hannifin go up and down completely randomly.
Pair Corralation between Safety Insurance and Parker Hannifin
Assuming the 90 days horizon Safety Insurance is expected to generate 6.19 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, Safety Insurance Group is 1.17 times less risky than Parker Hannifin. It trades about 0.02 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 27,114 in Parker Hannifin on September 3, 2024 and sell it today you would earn a total of 39,826 from holding Parker Hannifin or generate 146.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. Parker Hannifin
Performance |
| Timeline |
| Safety Insurance |
| Parker Hannifin |
Safety Insurance and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Parker Hannifin
The main advantage of trading using opposite Safety Insurance and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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.| Safety Insurance vs. Sims Metal Management | Safety Insurance vs. Flutter Entertainment PLC | Safety Insurance vs. TOWNSQUARE MEDIA INC | Safety Insurance vs. RCS MediaGroup SpA |
| Parker Hannifin vs. LION ONE METALS | Parker Hannifin vs. Ares Management Corp | Parker Hannifin vs. EPSILON HEALTHCARE LTD | Parker Hannifin vs. CEOTRONICS |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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