Correlation Between Fanuc and Ingersoll Rand

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

By analyzing existing cross correlation between Fanuc and Ingersoll Rand, you can compare the effects of market volatilities on Fanuc and Ingersoll Rand 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 Fanuc with a short position of Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanuc and Ingersoll Rand.

Diversification Opportunities for Fanuc and Ingersoll Rand

-0.17

Correlation Coefficient

Fanuc  Ingersoll Rand

Good diversification

The 3 months correlation between Fanuc and Ingersoll is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Fanuc 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 Fanuc are associated (or correlated) with Ingersoll Rand. 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 has no effect on the direction of Fanuc i.e., Fanuc and Ingersoll Rand go up and down completely randomly.

Pair Corralation between Fanuc and Ingersoll Rand

Assuming the 90 days horizon Fanuc is expected to under-perform the Ingersoll Rand. In addition to that, Fanuc is 1.17 times more volatile than Ingersoll Rand. It trades about -0.07 of its total potential returns per unit of risk. Ingersoll Rand is currently generating about 0.18 per unit of volatility. If you would invest  8,831  in Ingersoll Rand on September 3, 2024 and sell it today you would earn a total of  1,586  from holding Ingersoll Rand or generate 17.96% return on investment over 90 days.

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

Fanuc  vs.  Ingersoll Rand

Fanuc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fanuc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ingersoll Rand

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Ingersoll Rand reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fanuc and Ingersoll Rand

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

The idea behind Fanuc and Ingersoll Rand 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.