Correlation Between Illinois Tool and Omega Flex
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Omega Flex 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 Omega Flex 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 Omega Flex, you can compare the effects of market volatilities on Illinois Tool and Omega Flex 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 Omega Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Omega Flex.
Diversification Opportunities for Illinois Tool and Omega Flex
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Illinois and Omega is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex 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 Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of Illinois Tool i.e., Illinois Tool and Omega Flex go up and down completely randomly.
Pair Corralation between Illinois Tool and Omega Flex
Considering the 90-day investment horizon Illinois Tool Works is expected to generate 0.54 times more return on investment than Omega Flex. However, Illinois Tool Works is 1.86 times less risky than Omega Flex. It trades about 0.14 of its potential returns per unit of risk. Omega Flex is currently generating about 0.0 per unit of risk. If you would invest 24,761 in Illinois Tool Works on November 9, 2024 and sell it today you would earn a total of 748.00 from holding Illinois Tool Works or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Omega Flex
Performance |
| Timeline |
| Illinois Tool Works |
| Omega Flex |
Illinois Tool and Omega Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Omega Flex
The main advantage of trading using opposite Illinois Tool and Omega Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Omega Flex 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 Omega Flex will offset losses from the drop in Omega Flex's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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