Correlation Between Pentair PLC and Parker Hannifin

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

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

Diversification Opportunities for Pentair PLC and Parker Hannifin

0.91

Correlation Coefficient

Pentair PLC  Parker Hannifin

Almost no diversification

The 3 months correlation between Pentair and Parker is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin and Pentair PLC 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 Pentair PLC are associated (or correlated) with Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Pentair PLC i.e., Pentair PLC and Parker Hannifin go up and down completely randomly.

Pair Corralation between Pentair PLC and Parker Hannifin

Considering the 90-day investment horizon Pentair PLC is expected to generate 1.3 times less return on investment than Parker Hannifin. In addition to that, Pentair PLC is 1.14 times more volatile than Parker Hannifin. It trades about 0.14 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.2 per unit of volatility. If you would invest  62,127  in Parker Hannifin on May 7, 2025 and sell it today you would earn a total of  9,777  from holding Parker Hannifin or generate 15.74% return on investment over 90 days.

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

Pentair PLC  vs.  Parker Hannifin

Pentair PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Pentair PLC may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Parker Hannifin

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 16 (%) 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.

Pair Trading with Pentair PLC and Parker Hannifin

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

The idea behind Pentair PLC and Parker Hannifin 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.