Correlation Between Ingersoll Rand and ITT
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and ITT 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 ITT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and ITT Inc, you can compare the effects of market volatilities on Ingersoll Rand and ITT 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 ITT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and ITT.
Diversification Opportunities for Ingersoll Rand and ITT
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ingersoll and ITT is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and ITT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITT Inc 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 ITT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITT Inc has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and ITT go up and down completely randomly.
Pair Corralation between Ingersoll Rand and ITT
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.01 times less return on investment than ITT. In addition to that, Ingersoll Rand is 1.01 times more volatile than ITT Inc. It trades about 0.1 of its total potential returns per unit of risk. ITT Inc is currently generating about 0.1 per unit of volatility. If you would invest 10,943 in ITT Inc on August 27, 2024 and sell it today you would earn a total of 4,895 from holding ITT Inc or generate 44.73% 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. ITT Inc
Performance |
| Timeline |
| Ingersoll Rand |
| ITT Inc |
Ingersoll Rand and ITT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and ITT
The main advantage of trading using opposite Ingersoll Rand and ITT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, ITT 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 ITT will offset losses from the drop in ITT's long position.| Ingersoll Rand vs. Aquagold International | Ingersoll Rand vs. Morningstar Unconstrained Allocation | Ingersoll Rand vs. High Yield Municipal Fund | Ingersoll Rand vs. Thrivent High Yield |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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