Correlation Between Parker Hannifin and Software Acquisition
Can any of the company-specific risk be diversified away by investing in both Parker Hannifin and Software Acquisition 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 Software Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parker Hannifin and Software Acquisition Group, you can compare the effects of market volatilities on Parker Hannifin and Software Acquisition 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 Software Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Software Acquisition.
Diversification Opportunities for Parker Hannifin and Software Acquisition
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Parker and Software is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Software Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Acquisition 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 Software Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Acquisition has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Software Acquisition go up and down completely randomly.
Pair Corralation between Parker Hannifin and Software Acquisition
Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 3.15 times less return on investment than Software Acquisition. But when comparing it to its historical volatility, Parker Hannifin is 3.33 times less risky than Software Acquisition. It trades about 0.15 of its potential returns per unit of risk. Software Acquisition Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 118.00 in Software Acquisition Group on May 29, 2025 and sell it today you would earn a total of 46.00 from holding Software Acquisition Group or generate 38.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parker Hannifin vs. Software Acquisition Group
Performance |
| Timeline |
| Parker Hannifin |
| Software Acquisition |
Parker Hannifin and Software Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parker Hannifin and Software Acquisition
The main advantage of trading using opposite Parker Hannifin and Software Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parker Hannifin position performs unexpectedly, Software Acquisition 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 Software Acquisition will offset losses from the drop in Software Acquisition's long position.| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
| Software Acquisition vs. NETGEAR | Software Acquisition vs. Avadel Pharmaceuticals PLC | Software Acquisition vs. Pinterest | Software Acquisition vs. Merit Medical Systems |
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 Stocks Directory module to find actively traded stocks across global markets.
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