Correlation Between Illinois Tool and Nordex SE
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Nordex SE 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 Nordex SE 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 Nordex SE, you can compare the effects of market volatilities on Illinois Tool and Nordex SE 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 Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Nordex SE.
Diversification Opportunities for Illinois Tool and Nordex SE
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Illinois and Nordex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Illinois Tool i.e., Illinois Tool and Nordex SE go up and down completely randomly.
Pair Corralation between Illinois Tool and Nordex SE
If you would invest 26,113 in Illinois Tool Works on September 1, 2024 and sell it today you would earn a total of 1,639 from holding Illinois Tool Works or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Nordex SE
Performance |
| Timeline |
| Illinois Tool Works |
| Nordex SE |
Illinois Tool and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Nordex SE
The main advantage of trading using opposite Illinois Tool and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Nordex SE vs. GE Aerospace | Nordex SE vs. Eaton PLC | Nordex SE vs. Siemens AG Class | Nordex SE vs. Parker Hannifin |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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