Correlation Between Trane Technologies and John Bean
Can any of the company-specific risk be diversified away by investing in both Trane Technologies and John Bean 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 Trane Technologies and John Bean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trane Technologies plc and John Bean Technologies, you can compare the effects of market volatilities on Trane Technologies and John Bean 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 Trane Technologies with a short position of John Bean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trane Technologies and John Bean.
Diversification Opportunities for Trane Technologies and John Bean
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trane and John is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Trane Technologies plc and John Bean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Bean Technologies and Trane Technologies 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 Trane Technologies plc are associated (or correlated) with John Bean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Bean Technologies has no effect on the direction of Trane Technologies i.e., Trane Technologies and John Bean go up and down completely randomly.
Pair Corralation between Trane Technologies and John Bean
Assuming the 90 days horizon Trane Technologies plc is expected to generate 0.7 times more return on investment than John Bean. However, Trane Technologies plc is 1.42 times less risky than John Bean. It trades about 0.11 of its potential returns per unit of risk. John Bean Technologies is currently generating about 0.03 per unit of risk. If you would invest 19,837 in Trane Technologies plc on November 28, 2024 and sell it today you would earn a total of 13,403 from holding Trane Technologies plc or generate 67.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Trane Technologies plc vs. John Bean Technologies
Performance |
| Timeline |
| Trane Technologies plc |
| John Bean Technologies |
Trane Technologies and John Bean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trane Technologies and John Bean
The main advantage of trading using opposite Trane Technologies and John Bean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trane Technologies position performs unexpectedly, John Bean 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 John Bean will offset losses from the drop in John Bean's long position.| Trane Technologies vs. Corsair Gaming | Trane Technologies vs. Direct Line Insurance | Trane Technologies vs. JSC Halyk bank | Trane Technologies vs. PENN NATL GAMING |
| John Bean vs. Global Ship Lease | John Bean vs. Nok Airlines PCL | John Bean vs. FUYO GENERAL LEASE | John Bean vs. JAPAN AIRLINES |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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