Correlation Between Ingersoll Rand and Industrials Portfolio
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Industrials Portfolio 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 Industrials Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Industrials Portfolio Industrials, you can compare the effects of market volatilities on Ingersoll Rand and Industrials Portfolio 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 Industrials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Industrials Portfolio.
Diversification Opportunities for Ingersoll Rand and Industrials Portfolio
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ingersoll and Industrials is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Industrials Portfolio Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrials Portfolio 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 Industrials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrials Portfolio has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Industrials Portfolio go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Industrials Portfolio
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.31 times less return on investment than Industrials Portfolio. In addition to that, Ingersoll Rand is 1.09 times more volatile than Industrials Portfolio Industrials. It trades about 0.11 of its total potential returns per unit of risk. Industrials Portfolio Industrials is currently generating about 0.15 per unit of volatility. If you would invest 4,138 in Industrials Portfolio Industrials on November 5, 2024 and sell it today you would earn a total of 155.00 from holding Industrials Portfolio Industrials or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingersoll Rand vs. Industrials Portfolio Industri
Performance |
| Timeline |
| Ingersoll Rand |
| Industrials Portfolio |
Ingersoll Rand and Industrials Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Industrials Portfolio
The main advantage of trading using opposite Ingersoll Rand and Industrials Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Industrials Portfolio 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 Industrials Portfolio will offset losses from the drop in Industrials Portfolio's long position.| Ingersoll Rand vs. IDEX Corporation | Ingersoll Rand vs. Flowserve | Ingersoll Rand vs. Donaldson | Ingersoll Rand vs. Franklin Electric Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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