Correlation Between Custom Truck and INGERSOLL

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

By analyzing existing cross correlation between Custom Truck One and INGERSOLL RAND LUXEMBOURG FINANCE, you can compare the effects of market volatilities on Custom Truck and INGERSOLL 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 Custom Truck with a short position of INGERSOLL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and INGERSOLL.

Diversification Opportunities for Custom Truck and INGERSOLL

-0.47

Correlation Coefficient

Custom Truck  INGERSOLL

Very good diversification

The 3 months correlation between Custom and INGERSOLL is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and INGERSOLL RAND LUXEMBOURG FINA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND LUXEM and Custom Truck 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 Custom Truck One are associated (or correlated) with INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND LUXEM has no effect on the direction of Custom Truck i.e., Custom Truck and INGERSOLL go up and down completely randomly.

Pair Corralation between Custom Truck and INGERSOLL

Given the investment horizon of 90 days Custom Truck One is expected to under-perform the INGERSOLL. In addition to that, Custom Truck is 5.19 times more volatile than INGERSOLL RAND LUXEMBOURG FINANCE. It trades about -0.01 of its total potential returns per unit of risk. INGERSOLL RAND LUXEMBOURG FINANCE is currently generating about 0.02 per unit of volatility. If you would invest  9,644  in INGERSOLL RAND LUXEMBOURG FINANCE on October 7, 2024 and sell it today you would earn a total of  40.00  from holding INGERSOLL RAND LUXEMBOURG FINANCE or generate 0.41% return on investment over 90 days.

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

Custom Truck One  vs.  INGERSOLL RAND LUXEMBOURG FINA

Custom Truck One

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

INGERSOLL RAND LUXEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND LUXEMBOURG FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Custom Truck and INGERSOLL

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

The idea behind Custom Truck One and INGERSOLL RAND LUXEMBOURG FINANCE 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.