Correlation Between Illinois Tool and Aumann AG
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Aumann AG 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 Aumann AG 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 Aumann AG, you can compare the effects of market volatilities on Illinois Tool and Aumann AG 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 Aumann AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Aumann AG.
Diversification Opportunities for Illinois Tool and Aumann AG
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Illinois and Aumann is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG 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 Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of Illinois Tool i.e., Illinois Tool and Aumann AG go up and down completely randomly.
Pair Corralation between Illinois Tool and Aumann AG
If you would invest 1,145 in Aumann AG on November 27, 2024 and sell it today you would earn a total of 0.00 from holding Aumann AG or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Aumann AG
Performance |
| Timeline |
| Illinois Tool Works |
| Aumann AG |
Illinois Tool and Aumann AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Aumann AG
The main advantage of trading using opposite Illinois Tool and Aumann AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Aumann AG 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 Aumann AG will offset losses from the drop in Aumann AG's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Aumann AG vs. Alfa Laval AB | Aumann AG vs. Arista Power | Aumann AG vs. Atlas Copco AB | Aumann AG 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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