Correlation Between Vestas Wind and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Vestas Wind 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 Vestas Wind and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and Parker Hannifin, you can compare the effects of market volatilities on Vestas Wind 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 Vestas Wind with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Parker Hannifin.
Diversification Opportunities for Vestas Wind and Parker Hannifin
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vestas and Parker is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Vestas Wind 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 Vestas Wind Systems 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 Vestas Wind i.e., Vestas Wind and Parker Hannifin go up and down completely randomly.
Pair Corralation between Vestas Wind and Parker Hannifin
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Parker Hannifin. In addition to that, Vestas Wind is 1.51 times more volatile than Parker Hannifin. It trades about -0.12 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.1 per unit of volatility. If you would invest 52,375 in Parker Hannifin on September 1, 2024 and sell it today you would earn a total of 17,915 from holding Parker Hannifin or generate 34.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Parker Hannifin
Performance |
| Timeline |
| Vestas Wind Systems |
| Parker Hannifin |
Vestas Wind and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Parker Hannifin
The main advantage of trading using opposite Vestas Wind and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind 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.| Vestas Wind vs. Kone Oyj ADR | Vestas Wind vs. Schneider Electric SE | Vestas Wind vs. Schneider Electric SA | Vestas Wind vs. Fanuc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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