Correlation Between Hillenbrand and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Hillenbrand 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 Hillenbrand and Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillenbrand and Illinois Tool Works, you can compare the effects of market volatilities on Hillenbrand 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 Hillenbrand with a short position of Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillenbrand and Illinois Tool.
Diversification Opportunities for Hillenbrand and Illinois Tool
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hillenbrand and Illinois is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand 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 Hillenbrand 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 Hillenbrand 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 Hillenbrand i.e., Hillenbrand and Illinois Tool go up and down completely randomly.
Pair Corralation between Hillenbrand and Illinois Tool
Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the Illinois Tool. In addition to that, Hillenbrand is 1.98 times more volatile than Illinois Tool Works. It trades about -0.02 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 21,009 in Illinois Tool Works on August 30, 2024 and sell it today you would earn a total of 6,595 from holding Illinois Tool Works or generate 31.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hillenbrand vs. Illinois Tool Works
Performance |
| Timeline |
| Hillenbrand |
| Illinois Tool Works |
Hillenbrand and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hillenbrand and Illinois Tool
The main advantage of trading using opposite Hillenbrand and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand 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.| Hillenbrand vs. IDEX Corporation | Hillenbrand vs. Watts Water Technologies | Hillenbrand vs. Donaldson | Hillenbrand vs. Gorman Rupp |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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