Correlation Between WT Offshore and INGERSOLL

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

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

Diversification Opportunities for WT Offshore and INGERSOLL

0.3

Correlation Coefficient

WT Offshore  INGERSOLL

Weak diversification

The 3 months correlation between WTI and INGERSOLL is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore 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 WT Offshore 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 WT Offshore 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 WT Offshore i.e., WT Offshore and INGERSOLL go up and down completely randomly.

Pair Corralation between WT Offshore and INGERSOLL

Considering the 90-day investment horizon WT Offshore is expected to under-perform the INGERSOLL. In addition to that, WT Offshore is 2.38 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about -0.07 of its total potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about 0.02 per unit of volatility. If you would invest  9,903  in INGERSOLL RAND GLOBAL HLDG on October 4, 2024 and sell it today you would earn a total of  240.00  from holding INGERSOLL RAND GLOBAL HLDG or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.76%
Values	Daily Returns

WT Offshore  vs.  INGERSOLL RAND GLOBAL HLDG

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 WT Offshore and INGERSOLL

The main advantage of trading using opposite WT Offshore and INGERSOLL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore 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 WT Offshore 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.