Correlation Between Parker Hannifin and Crane
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Crane 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 Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Crane Company, you can compare the effects of market volatilities on Parker Hannifin and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Crane.
Diversification Opportunities for Parker Hannifin and Crane
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Parker and Crane is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Crane go up and down completely randomly.
Pair Corralation between Parker Hannifin and Crane
Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the Crane. But the stock apears to be less risky and, when comparing its historical volatility, Parker Hannifin is 1.69 times less risky than Crane. The stock trades about -0.02 of its potential returns per unit of risk. The Crane Company is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 13,390 in Crane Company on January 26, 2024 and sell it today you would earn a total of 823.00 from holding Crane Company or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Crane Company
Performance |
| Timeline |
| Parker Hannifin |
| Crane Company |
Parker Hannifin and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Crane
The main advantage of trading using opposite Parker Hannifin and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Global Correlations Find global opportunities by holding instruments from different markets |