Correlation Between Ingersoll Rand and Kadant
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Kadant 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 Kadant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Kadant Inc, you can compare the effects of market volatilities on Ingersoll Rand and Kadant 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 Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Kadant.
Diversification Opportunities for Ingersoll Rand and Kadant
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingersoll and Kadant is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant 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 Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Kadant go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Kadant
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.32 times less return on investment than Kadant. But when comparing it to its historical volatility, Ingersoll Rand is 1.28 times less risky than Kadant. It trades about 0.1 of its potential returns per unit of risk. Kadant Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 26,124 in Kadant Inc on August 27, 2024 and sell it today you would earn a total of 15,777 from holding Kadant Inc or generate 60.39% 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. Kadant Inc
Performance |
| Timeline |
| Ingersoll Rand |
| Kadant Inc |
Ingersoll Rand and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Kadant
The main advantage of trading using opposite Ingersoll Rand and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Kadant 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 Kadant will offset losses from the drop in Kadant'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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