Correlation Between WEC Energy and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both WEC Energy 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 WEC Energy and Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEC Energy Group and Parker Hannifin, you can compare the effects of market volatilities on WEC Energy 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 WEC Energy with a short position of Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Parker Hannifin.
Diversification Opportunities for WEC Energy and Parker Hannifin
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WEC and Parker is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and WEC Energy 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 WEC Energy 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 WEC Energy i.e., WEC Energy and Parker Hannifin go up and down completely randomly.
Pair Corralation between WEC Energy and Parker Hannifin
Considering the 90-day investment horizon WEC Energy is expected to generate 3.87 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, WEC Energy Group is 1.43 times less risky than Parker Hannifin. It trades about 0.05 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 34,939 in Parker Hannifin on August 31, 2024 and sell it today you would earn a total of 35,351 from holding Parker Hannifin or generate 101.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Parker Hannifin
Performance |
| Timeline |
| WEC Energy Group |
| Parker Hannifin |
WEC Energy and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Parker Hannifin
The main advantage of trading using opposite WEC Energy and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy 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.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Parker Hannifin vs. Standex International | Parker Hannifin vs. Donaldson | Parker Hannifin vs. CSW Industrials | Parker Hannifin vs. Franklin Electric Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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