Correlation Between Ingersoll Rand and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Rockwell Automation 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 Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Rockwell Automation, you can compare the effects of market volatilities on Ingersoll Rand and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Rockwell Automation.
Diversification Opportunities for Ingersoll Rand and Rockwell Automation
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingersoll and Rockwell is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Rockwell Automation go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Rockwell Automation
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 0.84 times more return on investment than Rockwell Automation. However, Ingersoll Rand is 1.19 times less risky than Rockwell Automation. It trades about 0.09 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.02 per unit of risk. If you would invest 5,321 in Ingersoll Rand on August 24, 2024 and sell it today you would earn a total of 4,983 from holding Ingersoll Rand or generate 93.65% 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. Rockwell Automation
Performance |
| Timeline |
| Ingersoll Rand |
| Rockwell Automation |
Ingersoll Rand and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Rockwell Automation
The main advantage of trading using opposite Ingersoll Rand and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Ingersoll Rand vs. Small Cap Core | Ingersoll Rand vs. Freedom Holding Corp | Ingersoll Rand vs. Gfl Environmental Holdings | Ingersoll Rand vs. Growth Fund Of |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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