Correlation Between Parker Hannifin and Gates Industrial

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

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

Diversification Opportunities for Parker Hannifin and Gates Industrial

0.97

Correlation Coefficient

Parker Hannifin  Gates Industrial

Almost no diversification

The 3 months correlation between Parker and Gates is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Gates Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gates Industrial 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 Gates Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gates Industrial has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Gates Industrial go up and down completely randomly.

Pair Corralation between Parker Hannifin and Gates Industrial

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.35 times less return on investment than Gates Industrial. But when comparing it to its historical volatility, Parker Hannifin is 1.27 times less risky than Gates Industrial. It trades about 0.2 of its potential returns per unit of risk. Gates Industrial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,000  in Gates Industrial on May 4, 2025 and sell it today you would earn a total of  434.00  from holding Gates Industrial or generate 21.7% return on investment over 90 days.

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

Parker Hannifin  vs.  Gates Industrial

Parker Hannifin

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Parker Hannifin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Gates Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gates Industrial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Gates Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parker Hannifin and Gates Industrial

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

The idea behind Parker Hannifin and Gates Industrial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.