Correlation Between Apple and Parker-Hannifin Corp

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Can any of the company-specific risk be diversified away by investing in both Apple and Parker-Hannifin Corp 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 Apple and Parker-Hannifin Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Parker-Hannifin Corp, you can compare the effects of market volatilities on Apple and Parker-Hannifin Corp 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 Apple with a short position of Parker-Hannifin Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Parker-Hannifin Corp.

Diversification Opportunities for Apple and Parker-Hannifin Corp

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Apple and Parker-Hannifin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Parker-Hannifin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker-Hannifin Corp and Apple 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 Apple Inc are associated (or correlated) with Parker-Hannifin Corp. 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 Corp has no effect on the direction of Apple i.e., Apple and Parker-Hannifin Corp go up and down completely randomly.

Pair Corralation between Apple and Parker-Hannifin Corp

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Parker-Hannifin Corp. In addition to that, Apple is 1.05 times more volatile than Parker-Hannifin Corp. It trades about -0.15 of its total potential returns per unit of risk. Parker-Hannifin Corp is currently generating about -0.11 per unit of volatility. If you would invest  26,653  in Parker-Hannifin Corp on July 5, 2022 and sell it today you would lose (1,427)  from holding Parker-Hannifin Corp or give up 5.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.24%
ValuesDaily Returns

Apple Inc  vs.  Parker-Hannifin Corp

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Parker-Hannifin Corp 
Parker-Hannifin Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Parker-Hannifin Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Parker-Hannifin Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Parker-Hannifin Price Channel

Apple and Parker-Hannifin Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Parker-Hannifin Corp

The main advantage of trading using opposite Apple and Parker-Hannifin Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Parker-Hannifin Corp 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 Corp will offset losses from the drop in Parker-Hannifin Corp's long position.
Apple vs. Amazon Inc
The idea behind Apple Inc and Parker-Hannifin Corp 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.
Parker-Hannifin Corp vs. Amazon Inc
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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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