Correlation Between Rackspace Technology and INGERSOLL

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

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

Diversification Opportunities for Rackspace Technology and INGERSOLL

0.21

Correlation Coefficient

Rackspace Technology  INGERSOLL

Modest diversification

The 3 months correlation between Rackspace and INGERSOLL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Rackspace Technology 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 Rackspace Technology 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 Rackspace Technology 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 Rackspace Technology i.e., Rackspace Technology and INGERSOLL go up and down completely randomly.

Pair Corralation between Rackspace Technology and INGERSOLL

Considering the 90-day investment horizon Rackspace Technology is expected to under-perform the INGERSOLL. In addition to that, Rackspace Technology is 2.79 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about -0.28 of its total potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about -0.07 per unit of volatility. If you would invest  10,444  in INGERSOLL RAND GLOBAL HLDG on September 25, 2024 and sell it today you would lose (102.00) from holding INGERSOLL RAND GLOBAL HLDG or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.14%
Values	Daily Returns

Rackspace Technology  vs.  INGERSOLL RAND GLOBAL HLDG

Rackspace Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rackspace Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rackspace Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGERSOLL RAND GLOBAL HLDG investors.

Pair Trading with Rackspace Technology and INGERSOLL

The main advantage of trading using opposite Rackspace Technology and INGERSOLL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rackspace Technology 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 Rackspace Technology 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.