Correlation Between Mills Music and INGERSOLL

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

By analyzing existing cross correlation between Mills Music Trust and INGERSOLL RAND GLOBAL HLDG, you can compare the effects of market volatilities on Mills Music and INGERSOLL 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 Mills Music with a short position of INGERSOLL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mills Music and INGERSOLL.

Diversification Opportunities for Mills Music and INGERSOLL

0.09

Correlation Coefficient

Mills Music  INGERSOLL

Significant diversification

The 3 months correlation between Mills and INGERSOLL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mills Music Trust and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL and Mills Music 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 Mills Music Trust are associated (or correlated) with INGERSOLL. 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 GLOBAL has no effect on the direction of Mills Music i.e., Mills Music and INGERSOLL go up and down completely randomly.

Pair Corralation between Mills Music and INGERSOLL

Assuming the 90 days horizon Mills Music Trust is expected to generate 1.13 times more return on investment than INGERSOLL. However, Mills Music is 1.13 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about 0.17 of its potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about -0.08 per unit of risk. If you would invest  3,700  in Mills Music Trust on September 19, 2024 and sell it today you would earn a total of  120.00  from holding Mills Music Trust or generate 3.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Mills Music Trust  vs.  INGERSOLL RAND GLOBAL HLDG

Mills Music Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mills Music Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Mills Music may actually be approaching a critical reversion point that can send shares even higher in January 2025.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for INGERSOLL RAND GLOBAL HLDG investors.

Pair Trading with Mills Music and INGERSOLL

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

The idea behind Mills Music Trust and INGERSOLL RAND GLOBAL HLDG 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.