Correlation Between Parker Hannifin and Commscope

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

By analyzing existing cross correlation between Parker Hannifin and Commscope Finance 6, you can compare the effects of market volatilities on Parker Hannifin and Commscope 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 Commscope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Commscope.

Diversification Opportunities for Parker Hannifin and Commscope

0.0

Correlation Coefficient

Parker Hannifin  Commscope

Pay attention - limited upside

The 3 months correlation between Parker and Commscope is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Commscope Finance 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commscope Finance 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 Commscope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commscope Finance has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Commscope go up and down completely randomly.

Pair Corralation between Parker Hannifin and Commscope

If you would invest  59,537  in Parker Hannifin on September 14, 2024 and sell it today you would earn a total of  8,720  from holding Parker Hannifin or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Parker Hannifin  vs.  Commscope Finance 6

Parker Hannifin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Parker Hannifin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Commscope Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commscope Finance 6 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Commscope is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Parker Hannifin and Commscope

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

The idea behind Parker Hannifin and Commscope Finance 6 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.