Correlation Between Heartland Financial and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Heartland Financial and Illinois Tool 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 Heartland Financial and Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Financial USA and Illinois Tool Works, you can compare the effects of market volatilities on Heartland Financial and Illinois Tool 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 Heartland Financial with a short position of Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and Illinois Tool.
Diversification Opportunities for Heartland Financial and Illinois Tool
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heartland and Illinois is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works and Heartland Financial 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 Heartland Financial USA are associated (or correlated) with Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of Heartland Financial i.e., Heartland Financial and Illinois Tool go up and down completely randomly.
Pair Corralation between Heartland Financial and Illinois Tool
Assuming the 90 days horizon Heartland Financial USA is expected to generate 1.95 times more return on investment than Illinois Tool. However, Heartland Financial is 1.95 times more volatile than Illinois Tool Works. It trades about 0.18 of its potential returns per unit of risk. Illinois Tool Works is currently generating about 0.13 per unit of risk. If you would invest 3,875 in Heartland Financial USA on September 3, 2024 and sell it today you would earn a total of 2,475 from holding Heartland Financial USA or generate 63.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Financial USA vs. Illinois Tool Works
Performance |
| Timeline |
| Heartland Financial USA |
| Illinois Tool Works |
Heartland Financial and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Financial and Illinois Tool
The main advantage of trading using opposite Heartland Financial and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool's long position.| Heartland Financial vs. FIREWEED METALS P | Heartland Financial vs. Constellation Software | Heartland Financial vs. JAPAN TOBACCO UNSPADR12 | Heartland Financial vs. Jacquet Metal Service |
| Illinois Tool vs. SOLSTAD OFFSHORE NK | Illinois Tool vs. Jacquet Metal Service | Illinois Tool vs. Solstad Offshore ASA | Illinois Tool vs. Zijin Mining Group |
Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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