Correlation Between Illinois Tool and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Superior Plus 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 Illinois Tool and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Illinois Tool Works and Superior Plus Corp, you can compare the effects of market volatilities on Illinois Tool and Superior Plus 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 Illinois Tool with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Superior Plus.
Diversification Opportunities for Illinois Tool and Superior Plus
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Illinois and Superior is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Illinois Tool 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 Illinois Tool Works are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Illinois Tool i.e., Illinois Tool and Superior Plus go up and down completely randomly.
Pair Corralation between Illinois Tool and Superior Plus
Assuming the 90 days horizon Illinois Tool Works is expected to generate 0.23 times more return on investment than Superior Plus. However, Illinois Tool Works is 4.37 times less risky than Superior Plus. It trades about 0.41 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.01 per unit of risk. If you would invest 23,650 in Illinois Tool Works on August 29, 2024 and sell it today you would earn a total of 2,680 from holding Illinois Tool Works or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Illinois Tool Works vs. Superior Plus Corp
Performance |
| Timeline |
| Illinois Tool Works |
| Superior Plus Corp |
Illinois Tool and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Superior Plus
The main advantage of trading using opposite Illinois Tool and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Illinois Tool vs. Scandinavian Tobacco Group | Illinois Tool vs. Platinum Investment Management | Illinois Tool vs. Verizon Communications | Illinois Tool vs. Rogers Communications |
| Superior Plus vs. Meli Hotels International | Superior Plus vs. InterContinental Hotels Group | Superior Plus vs. PT Bank Maybank | Superior Plus vs. Pebblebrook Hotel Trust |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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