Correlation Between Ingersoll Rand and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Illinois Tool 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 Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Illinois Tool Works, you can compare the effects of market volatilities on Ingersoll Rand and Illinois Tool 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 Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Illinois Tool.
Diversification Opportunities for Ingersoll Rand and Illinois Tool
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ingersoll and Illinois is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works 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 Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Illinois Tool go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Illinois Tool
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.27 times more return on investment than Illinois Tool. However, Ingersoll Rand is 1.27 times more volatile than Illinois Tool Works. It trades about 0.21 of its potential returns per unit of risk. Illinois Tool Works is currently generating about 0.24 per unit of risk. If you would invest 9,709 in Ingersoll Rand on August 27, 2024 and sell it today you would earn a total of 691.00 from holding Ingersoll Rand or generate 7.12% 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. Illinois Tool Works
Performance |
| Timeline |
| Ingersoll Rand |
| Illinois Tool Works |
Ingersoll Rand and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Illinois Tool
The main advantage of trading using opposite Ingersoll Rand and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool's long position.| Ingersoll Rand vs. IDEX Corporation | Ingersoll Rand vs. Flowserve | Ingersoll Rand vs. Donaldson | Ingersoll Rand vs. Franklin Electric Co |
| Illinois Tool vs. Aquagold International | Illinois Tool vs. Morningstar Unconstrained Allocation | Illinois Tool vs. High Yield Municipal Fund | Illinois Tool 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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