Correlation Between Illinois Tool and Mirion Technologies
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Mirion Technologies 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 Mirion Technologies 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 Mirion Technologies, you can compare the effects of market volatilities on Illinois Tool and Mirion Technologies 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 Mirion Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Mirion Technologies.
Diversification Opportunities for Illinois Tool and Mirion Technologies
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Illinois and Mirion is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Mirion Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirion Technologies 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 Mirion Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirion Technologies has no effect on the direction of Illinois Tool i.e., Illinois Tool and Mirion Technologies go up and down completely randomly.
Pair Corralation between Illinois Tool and Mirion Technologies
Considering the 90-day investment horizon Illinois Tool is expected to generate 1.98 times less return on investment than Mirion Technologies. But when comparing it to its historical volatility, Illinois Tool Works is 1.94 times less risky than Mirion Technologies. It trades about 0.27 of its potential returns per unit of risk. Mirion Technologies is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,407 in Mirion Technologies on August 30, 2024 and sell it today you would earn a total of 221.00 from holding Mirion Technologies or generate 15.71% 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. Mirion Technologies
Performance |
| Timeline |
| Illinois Tool Works |
| Mirion Technologies |
Illinois Tool and Mirion Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Mirion Technologies
The main advantage of trading using opposite Illinois Tool and Mirion Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Mirion Technologies 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 Mirion Technologies will offset losses from the drop in Mirion Technologies' long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Mirion Technologies vs. Enpro Industries | Mirion Technologies vs. Graham | Mirion Technologies vs. CSW Industrials | Mirion Technologies vs. Gorman Rupp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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