Correlation Between Ingersoll Rand and Dover

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

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

Diversification Opportunities for Ingersoll Rand and Dover

0.91

Correlation Coefficient

Ingersoll Rand  Dover

Almost no diversification

The 3 months correlation between Ingersoll and Dover is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Dover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dover and Ingersoll Rand 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 Ingersoll Rand are associated (or correlated) with Dover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dover has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Dover go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Dover

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.1 times more return on investment than Dover. However, Ingersoll Rand is 1.1 times more volatile than Dover. It trades about 0.14 of its potential returns per unit of risk. Dover is currently generating about 0.12 per unit of risk. If you would invest  9,143  in Ingersoll Rand on August 30, 2024 and sell it today you would earn a total of  1,262  from holding Ingersoll Rand or generate 13.8% return on investment over 90 days.

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

Ingersoll Rand  vs.  Dover

Ingersoll Rand

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ingersoll Rand reported solid returns over the last few months and may actually be approaching a breakup point.

Dover

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dover are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dover may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ingersoll Rand and Dover

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

The idea behind Ingersoll Rand and Dover 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.