Correlation Between Ingersoll Rand and Enerpac Tool

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

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

Diversification Opportunities for Ingersoll Rand and Enerpac Tool

0.75

Correlation Coefficient

Ingersoll Rand  Enerpac Tool

Poor diversification

The 3 months correlation between Ingersoll and Enerpac is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group 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 Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Enerpac Tool go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Enerpac Tool

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to under-perform the Enerpac Tool. But the stock apears to be less risky and, when comparing its historical volatility, Ingersoll Rand is 1.77 times less risky than Enerpac Tool. The stock trades about -0.23 of its potential returns per unit of risk. The Enerpac Tool Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,725  in Enerpac Tool Group on September 19, 2024 and sell it today you would earn a total of  10.00  from holding Enerpac Tool Group or generate 0.21% return on investment over 90 days.

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

Ingersoll Rand  vs.  Enerpac Tool Group

Ingersoll Rand

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ingersoll Rand has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ingersoll Rand is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Enerpac Tool Group

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingersoll Rand and Enerpac Tool

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

The idea behind Ingersoll Rand and Enerpac Tool Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.