Correlation Between Parker Hannifin and JJill

Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and JJill 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 JJill into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Parker Hannifin and JJill Inc, you can compare the effects of market volatilities on Parker Hannifin and JJill 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 JJill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and JJill.

Diversification Opportunities for Parker Hannifin and JJill

0.69

Correlation Coefficient

Parker Hannifin  JJill

Poor diversification

The 3 months correlation between Parker and JJill is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill 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 JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and JJill go up and down completely randomly.

Pair Corralation between Parker Hannifin and JJill

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.56 times more return on investment than JJill. However, Parker Hannifin is 1.8 times less risky than JJill. It trades about 0.12 of its potential returns per unit of risk. JJill Inc is currently generating about 0.03 per unit of risk. If you would invest  32,427  in Parker Hannifin on September 19, 2024 and sell it today you would earn a total of  34,172  from holding Parker Hannifin or generate 105.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Parker Hannifin  vs.  JJill Inc

Parker Hannifin

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Parker Hannifin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JJill Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Parker Hannifin and JJill

The main advantage of trading using opposite Parker Hannifin and JJill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, JJill 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 JJill will offset losses from the drop in JJill's long position.

The idea behind Parker Hannifin and JJill Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.