Correlation Between Ingersoll Rand and Nuscale Power

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

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

Diversification Opportunities for Ingersoll Rand and Nuscale Power

0.72

Correlation Coefficient

Ingersoll Rand  Nuscale Power

Poor diversification

The 3 months correlation between Ingersoll and Nuscale is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power Corp 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Nuscale Power go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Nuscale Power

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to under-perform the Nuscale Power. But the stock apears to be less risky and, when comparing its historical volatility, Ingersoll Rand is 4.55 times less risky than Nuscale Power. The stock trades about -0.11 of its potential returns per unit of risk. The Nuscale Power Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,821  in Nuscale Power Corp on December 29, 2024 and sell it today you would lose (211.00) from holding Nuscale Power Corp or give up 11.59% 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.  Nuscale Power Corp

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.

Nuscale Power Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuscale Power Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, Nuscale Power may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ingersoll Rand and Nuscale Power

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

The idea behind Ingersoll Rand and Nuscale Power Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.