Correlation Between Parker Hannifin and Ecolab
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Ecolab 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 Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Ecolab Inc, you can compare the effects of market volatilities on Parker Hannifin and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Ecolab.
Diversification Opportunities for Parker Hannifin and Ecolab
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Parker and Ecolab is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Ecolab go up and down completely randomly.
Pair Corralation between Parker Hannifin and Ecolab
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.23 times more return on investment than Ecolab. However, Parker Hannifin is 1.23 times more volatile than Ecolab Inc. It trades about 0.37 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.25 per unit of risk. If you would invest 54,575 in Parker Hannifin on April 20, 2025 and sell it today you would earn a total of 17,683 from holding Parker Hannifin or generate 32.4% 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. Ecolab Inc
Performance |
Timeline |
Parker Hannifin |
Ecolab Inc |
Parker Hannifin and Ecolab Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Parker Hannifin and Ecolab
The main advantage of trading using opposite Parker Hannifin and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.Parker Hannifin vs. Twin Disc Incorporated | Parker Hannifin vs. Clean Energy Technologies, | Parker Hannifin vs. Sobr Safe | Parker Hannifin vs. SUNation Energy |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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