Correlation Between Dover and Ingersoll Rand

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Can any of the company-specific risk be diversified away by investing in both Dover and Ingersoll Rand 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 Dover and Ingersoll Rand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dover and Ingersoll Rand, you can compare the effects of market volatilities on Dover and Ingersoll Rand 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 Dover with a short position of Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dover and Ingersoll Rand.

Diversification Opportunities for Dover and Ingersoll Rand

DoverIngersollDiversified AwayDoverIngersollDiversified Away100%
0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Dover and Ingersoll is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dover and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Dover 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 Dover are associated (or correlated) with Ingersoll Rand. 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 has no effect on the direction of Dover i.e., Dover and Ingersoll Rand go up and down completely randomly.

Pair Corralation between Dover and Ingersoll Rand

Considering the 90-day investment horizon Dover is expected to generate 0.58 times more return on investment than Ingersoll Rand. However, Dover is 1.71 times less risky than Ingersoll Rand. It trades about 0.09 of its potential returns per unit of risk. Ingersoll Rand is currently generating about -0.23 per unit of risk. If you would invest  19,841  in Dover on November 21, 2024 and sell it today you would earn a total of  392.00  from holding Dover or generate 1.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Dover  vs.  Ingersoll Rand

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15DOV IR
       Timeline  
Dover 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Dover has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dover is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb185190195200205210215220
Ingersoll Rand 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ingersoll Rand has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb9095100105

Dover and Ingersoll Rand Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.52-2.64-1.75-0.870.00.881.772.663.55 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15DOV IR
       Returns  

Pair Trading with Dover and Ingersoll Rand

The main advantage of trading using opposite Dover and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dover position performs unexpectedly, Ingersoll Rand 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 Rand will offset losses from the drop in Ingersoll Rand's long position.
The idea behind Dover and Ingersoll Rand 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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