Correlation Between China Natural and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both China Natural 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 China Natural and Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Natural Resources and Illinois Tool Works, you can compare the effects of market volatilities on China Natural 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 China Natural with a short position of Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Natural and Illinois Tool.
Diversification Opportunities for China Natural and Illinois Tool
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Illinois is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding China Natural Resources 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 China Natural 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 China Natural Resources 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 China Natural i.e., China Natural and Illinois Tool go up and down completely randomly.
Pair Corralation between China Natural and Illinois Tool
Given the investment horizon of 90 days China Natural Resources is expected to under-perform the Illinois Tool. In addition to that, China Natural is 2.63 times more volatile than Illinois Tool Works. It trades about -0.1 of its total potential returns per unit of risk. Illinois Tool Works is currently generating about -0.05 per unit of volatility. If you would invest 26,442 in Illinois Tool Works on November 27, 2024 and sell it today you would lose (282.00) from holding Illinois Tool Works or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
China Natural Resources vs. Illinois Tool Works
Performance |
| Timeline |
| China Natural Resources |
| Illinois Tool Works |
China Natural and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Natural and Illinois Tool
The main advantage of trading using opposite China Natural and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Natural 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.| China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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