Correlation Between Illinois Tool and China Aircraft
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and China Aircraft 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 China Aircraft 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 China Aircraft Leasing, you can compare the effects of market volatilities on Illinois Tool and China Aircraft 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 China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and China Aircraft.
Diversification Opportunities for Illinois Tool and China Aircraft
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Illinois and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing 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 China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of Illinois Tool i.e., Illinois Tool and China Aircraft go up and down completely randomly.
Pair Corralation between Illinois Tool and China Aircraft
If you would invest 25,638 in Illinois Tool Works on November 18, 2024 and sell it today you would earn a total of 173.00 from holding Illinois Tool Works or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. China Aircraft Leasing
Performance |
| Timeline |
| Illinois Tool Works |
| China Aircraft Leasing |
Illinois Tool and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and China Aircraft
The main advantage of trading using opposite Illinois Tool and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| China Aircraft vs. Playtech plc | China Aircraft vs. Mattel Inc | China Aircraft vs. SohuCom | China Aircraft vs. Academy Sports Outdoors |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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