Correlation Between Illinois Tool and Microbot Medical
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Microbot Medical 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 Microbot Medical 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 Microbot Medical, you can compare the effects of market volatilities on Illinois Tool and Microbot Medical 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 Microbot Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Microbot Medical.
Diversification Opportunities for Illinois Tool and Microbot Medical
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Illinois and Microbot is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical 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 Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of Illinois Tool i.e., Illinois Tool and Microbot Medical go up and down completely randomly.
Pair Corralation between Illinois Tool and Microbot Medical
Considering the 90-day investment horizon Illinois Tool is expected to generate 32.05 times less return on investment than Microbot Medical. But when comparing it to its historical volatility, Illinois Tool Works is 7.21 times less risky than Microbot Medical. It trades about 0.04 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 164.00 in Microbot Medical on November 18, 2024 and sell it today you would earn a total of 35.00 from holding Microbot Medical or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Microbot Medical
Performance |
| Timeline |
| Illinois Tool Works |
| Microbot Medical |
Illinois Tool and Microbot Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Microbot Medical
The main advantage of trading using opposite Illinois Tool and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Microbot Medical 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 Microbot Medical will offset losses from the drop in Microbot Medical's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Microbot Medical vs. Intuitive Surgical | Microbot Medical vs. Innerscope Advertising Agency | Microbot Medical vs. Predictive Oncology | Microbot Medical vs. STAAR Surgical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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