Correlation Between Ingersoll Rand and Nordex SE

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

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

Diversification Opportunities for Ingersoll Rand and Nordex SE

0.53

Correlation Coefficient

Ingersoll Rand  Nordex SE

Very weak diversification

The 3 months correlation between Ingersoll and Nordex is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Nordex SE go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Nordex SE

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to under-perform the Nordex SE. But the stock apears to be less risky and, when comparing its historical volatility, Ingersoll Rand is 1.53 times less risky than Nordex SE. The stock trades about -0.21 of its potential returns per unit of risk. The Nordex SE is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  738.00  in Nordex SE on December 1, 2024 and sell it today you would lose (88.00) from holding Nordex SE or give up 11.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Ingersoll Rand  vs.  Nordex SE

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Nordex SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordex SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ingersoll Rand and Nordex SE

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

The idea behind Ingersoll Rand and Nordex SE 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.