Correlation Between Ingersoll Rand and Standex International
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Standex International 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 Standex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Standex International, you can compare the effects of market volatilities on Ingersoll Rand and Standex International 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 Standex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Standex International.
Diversification Opportunities for Ingersoll Rand and Standex International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ingersoll and Standex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Standex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standex International 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 Standex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standex International has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Standex International go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Standex International
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.15 times less return on investment than Standex International. But when comparing it to its historical volatility, Ingersoll Rand is 1.2 times less risky than Standex International. It trades about 0.1 of its potential returns per unit of risk. Standex International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,551 in Standex International on August 27, 2024 and sell it today you would earn a total of 6,911 from holding Standex International or generate 51.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingersoll Rand vs. Standex International
Performance |
| Timeline |
| Ingersoll Rand |
| Standex International |
Ingersoll Rand and Standex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Standex International
The main advantage of trading using opposite Ingersoll Rand and Standex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Standex International 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 Standex International will offset losses from the drop in Standex International'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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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