Correlation Between Ingersoll Rand and Hillenbrand

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

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

Diversification Opportunities for Ingersoll Rand and Hillenbrand

0.75

Correlation Coefficient

Ingersoll Rand  Hillenbrand

Poor diversification

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

Pair Corralation between Ingersoll Rand and Hillenbrand

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to under-perform the Hillenbrand. But the stock apears to be less risky and, when comparing its historical volatility, Ingersoll Rand is 2.5 times less risky than Hillenbrand. The stock trades about -0.23 of its potential returns per unit of risk. The Hillenbrand is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,201  in Hillenbrand on September 18, 2024 and sell it today you would lose (120.00) from holding Hillenbrand or give up 3.75% of portfolio value over 90 days.

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

Ingersoll Rand  vs.  Hillenbrand

Ingersoll Rand

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Hillenbrand

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingersoll Rand and Hillenbrand

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

The idea behind Ingersoll Rand and Hillenbrand 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.