Correlation Between Illinois Tool and Amaero International
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Amaero 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 Illinois Tool and Amaero International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Illinois Tool Works and Amaero International, you can compare the effects of market volatilities on Illinois Tool and Amaero 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 Illinois Tool with a short position of Amaero International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Amaero International.
Diversification Opportunities for Illinois Tool and Amaero International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Illinois and Amaero is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Amaero International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaero International and Illinois Tool 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 Illinois Tool Works are associated (or correlated) with Amaero International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaero International has no effect on the direction of Illinois Tool i.e., Illinois Tool and Amaero International go up and down completely randomly.
Pair Corralation between Illinois Tool and Amaero International
Considering the 90-day investment horizon Illinois Tool Works is expected to generate 0.1 times more return on investment than Amaero International. However, Illinois Tool Works is 9.83 times less risky than Amaero International. It trades about -0.05 of its potential returns per unit of risk. Amaero International is currently generating about -0.15 per unit of risk. If you would invest 26,442 in Illinois Tool Works on November 27, 2024 and sell it today you would lose (282.00) from holding Illinois Tool Works or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Illinois Tool Works vs. Amaero International
Performance |
| Timeline |
| Illinois Tool Works |
| Amaero International |
Illinois Tool and Amaero International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Amaero International
The main advantage of trading using opposite Illinois Tool and Amaero International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Amaero 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 Amaero International will offset losses from the drop in Amaero International's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Amaero International vs. Atlas Copco AB | Amaero International vs. Arista Power | Amaero International vs. Alfa Laval AB | Amaero International vs. American Commerce Solutions |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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