Correlation Between Parker Hannifin and CSX

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

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

Diversification Opportunities for Parker Hannifin and CSX

-0.19

Correlation Coefficient

Parker Hannifin  CSX

Good diversification

The 3 months correlation between Parker and CSX is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and CSX go up and down completely randomly.

Pair Corralation between Parker Hannifin and CSX

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 1.08 times more return on investment than CSX. However, Parker Hannifin is 1.08 times more volatile than CSX Corporation. It trades about 0.14 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.01 per unit of risk. If you would invest  72,891  in Parker Hannifin on August 9, 2025 and sell it today you would earn a total of  10,524  from holding Parker Hannifin or generate 14.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Parker Hannifin  vs.  CSX Corp.

Parker Hannifin

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical indicators, Parker Hannifin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CSX Corporation

Risk-Adjusted Performance

Weakest

Over the last 90 days CSX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CSX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Parker Hannifin and CSX

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

The idea behind Parker Hannifin and CSX Corporation 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.