Correlation Between Illinois Tool and Ingersoll Rand
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Ingersoll Rand 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 Illinois Tool and Ingersoll Rand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Illinois Tool Works and Ingersoll Rand, you can compare the effects of market volatilities on Illinois Tool and Ingersoll Rand 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 Illinois Tool with a short position of Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Ingersoll Rand.
Diversification Opportunities for Illinois Tool and Ingersoll Rand
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Illinois and Ingersoll is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Illinois Tool 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 Illinois Tool Works are associated (or correlated) with Ingersoll Rand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingersoll Rand has no effect on the direction of Illinois Tool i.e., Illinois Tool and Ingersoll Rand go up and down completely randomly.
Pair Corralation between Illinois Tool and Ingersoll Rand
Considering the 90-day investment horizon Illinois Tool Works is expected to generate 0.8 times more return on investment than Ingersoll Rand. However, Illinois Tool Works is 1.25 times less risky than Ingersoll Rand. It trades about -0.03 of its potential returns per unit of risk. Ingersoll Rand is currently generating about -0.11 per unit of risk. If you would invest 25,333 in Illinois Tool Works on December 28, 2024 and sell it today you would lose (687.00) from holding Illinois Tool Works or give up 2.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Illinois Tool Works vs. Ingersoll Rand
Performance |
Timeline |
Illinois Tool Works |
Ingersoll Rand |
Illinois Tool and Ingersoll Rand Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Illinois Tool and Ingersoll Rand
The main advantage of trading using opposite Illinois Tool and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Ingersoll Rand 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 Ingersoll Rand will offset losses from the drop in Ingersoll Rand's long position.Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
Ingersoll Rand vs. IDEX Corporation | Ingersoll Rand vs. Flowserve | Ingersoll Rand vs. Donaldson | Ingersoll Rand vs. Franklin Electric Co |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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