Correlation Between Illinois Tool and NGK Insulators
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and NGK Insulators 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 NGK Insulators 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 NGK Insulators, you can compare the effects of market volatilities on Illinois Tool and NGK Insulators 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 NGK Insulators. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and NGK Insulators.
Diversification Opportunities for Illinois Tool and NGK Insulators
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Illinois and NGK is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and NGK Insulators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGK Insulators 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 NGK Insulators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGK Insulators has no effect on the direction of Illinois Tool i.e., Illinois Tool and NGK Insulators go up and down completely randomly.
Pair Corralation between Illinois Tool and NGK Insulators
If you would invest 26,388 in Illinois Tool Works on September 5, 2024 and sell it today you would earn a total of 1,211 from holding Illinois Tool Works or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Illinois Tool Works vs. NGK Insulators
Performance |
| Timeline |
| Illinois Tool Works |
| NGK Insulators |
Illinois Tool and NGK Insulators Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and NGK Insulators
The main advantage of trading using opposite Illinois Tool and NGK Insulators positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, NGK Insulators 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 NGK Insulators will offset losses from the drop in NGK Insulators' long position.| Illinois Tool vs. Laser Photonics | Illinois Tool vs. Siemens AG Class | Illinois Tool vs. ATVRockN | Illinois Tool vs. Nuburu Inc |
| NGK Insulators vs. Dear Cashmere Holding | NGK Insulators vs. Goff Corp | NGK Insulators vs. Wialan Technologies | NGK Insulators vs. Cgrowth Capital |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Transaction History View history of all your transactions and understand their impact on performance |