Correlation Between Ingersoll Rand and Tennant
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Tennant 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 Tennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Tennant Company, you can compare the effects of market volatilities on Ingersoll Rand and Tennant 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 Tennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Tennant.
Diversification Opportunities for Ingersoll Rand and Tennant
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingersoll and Tennant is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Tennant go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Tennant
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 2.54 times less return on investment than Tennant. In addition to that, Ingersoll Rand is 1.24 times more volatile than Tennant Company. It trades about 0.06 of its total potential returns per unit of risk. Tennant Company is currently generating about 0.17 per unit of volatility. If you would invest 8,222 in Tennant Company on November 4, 2024 and sell it today you would earn a total of 330.00 from holding Tennant Company or generate 4.01% 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. Tennant Company
Performance |
| Timeline |
| Ingersoll Rand |
| Tennant Company |
Ingersoll Rand and Tennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Tennant
The main advantage of trading using opposite Ingersoll Rand and Tennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Tennant 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 Tennant will offset losses from the drop in Tennant's long position.| Ingersoll Rand vs. IDEX Corporation | Ingersoll Rand vs. Flowserve | Ingersoll Rand vs. Donaldson | Ingersoll Rand vs. Franklin Electric Co |
| Tennant vs. Franklin Electric Co | Tennant vs. Omega Flex | Tennant vs. Luxfer Holdings PLC | Tennant vs. Kadant Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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