Correlation Between INGERSOLL and Custom Truck

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

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

Diversification Opportunities for INGERSOLL and Custom Truck

-0.03

Correlation Coefficient

INGERSOLL  Custom Truck

Good diversification

The 3 months correlation between INGERSOLL and Custom is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding INGERSOLL RAND GLOBAL HLDG and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and INGERSOLL 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 INGERSOLL RAND GLOBAL HLDG are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of INGERSOLL i.e., INGERSOLL and Custom Truck go up and down completely randomly.

Pair Corralation between INGERSOLL and Custom Truck

Assuming the 90 days trading horizon INGERSOLL RAND GLOBAL HLDG is expected to generate 22.54 times more return on investment than Custom Truck. However, INGERSOLL is 22.54 times more volatile than Custom Truck One. It trades about 0.06 of its potential returns per unit of risk. Custom Truck One is currently generating about -0.01 per unit of risk. If you would invest  10,732  in INGERSOLL RAND GLOBAL HLDG on October 23, 2024 and sell it today you would lose (589.00) from holding INGERSOLL RAND GLOBAL HLDG or give up 5.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

INGERSOLL RAND GLOBAL HLDG  vs.  Custom Truck One

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 somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Custom Truck One

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INGERSOLL and Custom Truck

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

The idea behind INGERSOLL RAND GLOBAL HLDG and Custom Truck One 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.