Correlation Between Ingersoll Rand and Generac Holdings
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Generac Holdings 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 Generac Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Generac Holdings, you can compare the effects of market volatilities on Ingersoll Rand and Generac Holdings 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 Generac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Generac Holdings.
Diversification Opportunities for Ingersoll Rand and Generac Holdings
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ingersoll and Generac is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Generac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generac Holdings 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 Generac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generac Holdings has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Generac Holdings go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Generac Holdings
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 0.77 times more return on investment than Generac Holdings. However, Ingersoll Rand is 1.3 times less risky than Generac Holdings. It trades about -0.15 of its potential returns per unit of risk. Generac Holdings is currently generating about -0.16 per unit of risk. If you would invest 9,188 in Ingersoll Rand on November 18, 2024 and sell it today you would lose (616.00) from holding Ingersoll Rand or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingersoll Rand vs. Generac Holdings
Performance |
| Timeline |
| Ingersoll Rand |
| Generac Holdings |
Ingersoll Rand and Generac Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Generac Holdings
The main advantage of trading using opposite Ingersoll Rand and Generac Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Generac Holdings 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 Generac Holdings will offset losses from the drop in Generac Holdings' long position.| Ingersoll Rand vs. IDEX Corporation | Ingersoll Rand vs. Flowserve | Ingersoll Rand vs. Donaldson | Ingersoll Rand vs. Franklin Electric Co |
| Generac Holdings vs. Emerson Electric | Generac Holdings vs. Eaton PLC | Generac Holdings vs. Parker Hannifin | Generac Holdings vs. Illinois Tool Works |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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