Correlation Between Illinois Tool and Intevac

Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Intevac 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 Intevac 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 Intevac, you can compare the effects of market volatilities on Illinois Tool and Intevac 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 Intevac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Intevac.

Diversification Opportunities for Illinois Tool and Intevac

-0.64

Correlation Coefficient

Illinois Tool  Intevac

Excellent diversification

The 3 months correlation between Illinois and Intevac is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Intevac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intevac 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 Intevac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intevac has no effect on the direction of Illinois Tool i.e., Illinois Tool and Intevac go up and down completely randomly.

Pair Corralation between Illinois Tool and Intevac

Considering the 90-day investment horizon Illinois Tool Works is expected to generate 0.29 times more return on investment than Intevac. However, Illinois Tool Works is 3.49 times less risky than Intevac. It trades about 0.18 of its potential returns per unit of risk. Intevac is currently generating about -0.08 per unit of risk. If you would invest  24,836  in Illinois Tool Works on September 3, 2024 and sell it today you would earn a total of  2,916  from holding Illinois Tool Works or generate 11.74% return on investment over 90 days.

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

Illinois Tool Works  vs.  Intevac

Illinois Tool Works

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Illinois Tool Works are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Illinois Tool may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Illinois Tool and Intevac

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

The idea behind Illinois Tool Works and Intevac 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.