Correlation Between Illinois Tool and Mirion Technologies

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

Diversification Opportunities for Illinois Tool and Mirion Technologies

0.0

Correlation Coefficient

Illinois Tool  Mirion Technologies

Pay attention - limited upside

The 3 months correlation between Illinois and Mirion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Mirion Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirion Technologies 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 Mirion Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirion Technologies has no effect on the direction of Illinois Tool i.e., Illinois Tool and Mirion Technologies go up and down completely randomly.

Pair Corralation between Illinois Tool and Mirion Technologies

Considering the 90-day investment horizon Illinois Tool Works is expected to generate 0.39 times more return on investment than Mirion Technologies. However, Illinois Tool Works is 2.56 times less risky than Mirion Technologies. It trades about -0.02 of its potential returns per unit of risk. Mirion Technologies is currently generating about -0.05 per unit of risk. If you would invest  25,612  in Illinois Tool Works on December 22, 2024 and sell it today you would lose (478.00) from holding Illinois Tool Works or give up 1.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Illinois Tool Works  vs.  Mirion Technologies

Illinois Tool Works

Risk-Adjusted Performance

Very Weak

Over the last 90 days Illinois Tool Works has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Illinois Tool is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mirion Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mirion Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Illinois Tool and Mirion Technologies

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

The idea behind Illinois Tool Works and Mirion Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.