Correlation Between Parker Hannifin and Under Armour
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Under Armour 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 Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Under Armour C, you can compare the effects of market volatilities on Parker Hannifin and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Under Armour.
Diversification Opportunities for Parker Hannifin and Under Armour
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parker and Under is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Under Armour go up and down completely randomly.
Pair Corralation between Parker Hannifin and Under Armour
Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the Under Armour. But the stock apears to be less risky and, when comparing its historical volatility, Parker Hannifin is 2.63 times less risky than Under Armour. The stock trades about -0.26 of its potential returns per unit of risk. The Under Armour C is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 832.00 in Under Armour C on September 21, 2024 and sell it today you would lose (54.00) from holding Under Armour C or give up 6.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Parker Hannifin vs. Under Armour C
Performance |
Timeline |
Parker Hannifin |
Under Armour C |
Parker Hannifin and Under Armour Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Parker Hannifin and Under Armour
The main advantage of trading using opposite Parker Hannifin and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.Parker Hannifin vs. Illinois Tool Works | ||
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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