Correlation Between Illinois Tool and Laser Photonics
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Laser Photonics 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 Laser Photonics 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 Laser Photonics, you can compare the effects of market volatilities on Illinois Tool and Laser Photonics 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 Laser Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Laser Photonics.
Diversification Opportunities for Illinois Tool and Laser Photonics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Illinois and Laser is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Laser Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laser Photonics 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 Laser Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laser Photonics has no effect on the direction of Illinois Tool i.e., Illinois Tool and Laser Photonics go up and down completely randomly.
Pair Corralation between Illinois Tool and Laser Photonics
Considering the 90-day investment horizon Illinois Tool is expected to generate 10.45 times less return on investment than Laser Photonics. But when comparing it to its historical volatility, Illinois Tool Works is 7.37 times less risky than Laser Photonics. It trades about 0.05 of its potential returns per unit of risk. Laser Photonics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 546.00 in Laser Photonics on September 13, 2024 and sell it today you would earn a total of 25.00 from holding Laser Photonics or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Laser Photonics
Performance |
| Timeline |
| Illinois Tool Works |
| Laser Photonics |
Illinois Tool and Laser Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Laser Photonics
The main advantage of trading using opposite Illinois Tool and Laser Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Laser Photonics 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 Laser Photonics will offset losses from the drop in Laser Photonics' long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Laser Photonics vs. Nuburu Inc | Laser Photonics vs. JE Cleantech Holdings | Laser Photonics vs. Reelcause | Laser Photonics vs. Shapeways Holdings, Common |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Positions Ratings 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 |