Correlation Between Illinois Tool and Crane
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Crane 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 Crane 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 Crane Company, you can compare the effects of market volatilities on Illinois Tool and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Crane.
Diversification Opportunities for Illinois Tool and Crane
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Illinois and Crane is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Illinois Tool i.e., Illinois Tool and Crane go up and down completely randomly.
Pair Corralation between Illinois Tool and Crane
Considering the 90-day investment horizon Illinois Tool is expected to generate 2.66 times less return on investment than Crane. But when comparing it to its historical volatility, Illinois Tool Works is 2.15 times less risky than Crane. It trades about 0.05 of its potential returns per unit of risk. Crane Company is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,076 in Crane Company on August 27, 2024 and sell it today you would earn a total of 8,360 from holding Crane Company or generate 82.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Crane Company
Performance |
| Timeline |
| Illinois Tool Works |
| Crane Company |
Illinois Tool and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Crane
The main advantage of trading using opposite Illinois Tool and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Crane vs. Aquagold International | Crane vs. Morningstar Unconstrained Allocation | Crane vs. High Yield Municipal Fund | Crane 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |