Correlation Between Ingersoll Rand and CSX
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and CSX 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 Ingersoll Rand and CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and CSX Corporation, you can compare the effects of market volatilities on Ingersoll Rand and CSX 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 Ingersoll Rand with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and CSX.
Diversification Opportunities for Ingersoll Rand and CSX
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingersoll and CSX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Ingersoll Rand 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 Ingersoll Rand are associated (or correlated) with CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and CSX go up and down completely randomly.
Pair Corralation between Ingersoll Rand and CSX
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.43 times less return on investment than CSX. But when comparing it to its historical volatility, Ingersoll Rand is 1.39 times less risky than CSX. It trades about 0.19 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,325 in CSX Corporation on August 30, 2024 and sell it today you would earn a total of 333.00 from holding CSX Corporation or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingersoll Rand vs. CSX Corp.
Performance |
| Timeline |
| Ingersoll Rand |
| CSX Corporation |
Ingersoll Rand and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and CSX
The main advantage of trading using opposite Ingersoll Rand and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| Ingersoll Rand vs. Illinois Tool Works | Ingersoll Rand vs. Pentair PLC | Ingersoll Rand vs. Emerson Electric | Ingersoll Rand vs. Smith AO |
| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX vs. Westinghouse Air Brake |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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