Correlation Between Ingersoll Rand and Kadant

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

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

Diversification Opportunities for Ingersoll Rand and Kadant

0.2

Correlation Coefficient

Ingersoll Rand  Kadant

Modest diversification

The 3 months correlation between Ingersoll and Kadant is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc 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 Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Kadant go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Kadant

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to under-perform the Kadant. But the stock apears to be less risky and, when comparing its historical volatility, Ingersoll Rand is 1.26 times less risky than Kadant. The stock trades about -0.11 of its potential returns per unit of risk. The Kadant Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  34,532  in Kadant Inc on December 28, 2024 and sell it today you would lose (937.00) from holding Kadant Inc or give up 2.71% of portfolio value over 90 days.

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

Ingersoll Rand  vs.  Kadant Inc

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.

Kadant Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Kadant Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kadant is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ingersoll Rand and Kadant

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

The idea behind Ingersoll Rand and Kadant Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.