Correlation Between Flowserve and Ingersoll Rand

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

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

Diversification Opportunities for Flowserve and Ingersoll Rand

0.88

Correlation Coefficient

Flowserve  Ingersoll Rand

Very poor diversification

The 3 months correlation between Flowserve and Ingersoll is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Flowserve 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 Flowserve 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 Flowserve i.e., Flowserve and Ingersoll Rand go up and down completely randomly.

Pair Corralation between Flowserve and Ingersoll Rand

Considering the 90-day investment horizon Flowserve is expected to under-perform the Ingersoll Rand. In addition to that, Flowserve is 1.3 times more volatile than Ingersoll Rand. It trades about -0.1 of its total potential returns per unit of risk. Ingersoll Rand is currently generating about -0.11 per unit of volatility. If you would invest  9,050  in Ingersoll Rand on December 30, 2024 and sell it today you would lose (1,106) from holding Ingersoll Rand or give up 12.22% of portfolio value over 90 days.

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

Flowserve  vs.  Ingersoll Rand

Flowserve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flowserve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ingersoll Rand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingersoll Rand has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Flowserve and Ingersoll Rand

The main advantage of trading using opposite Flowserve and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve 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 Flowserve 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.