Correlation Between Illinois Tool and Regal Beloit
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Regal Beloit 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 Regal Beloit 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 Regal Beloit, you can compare the effects of market volatilities on Illinois Tool and Regal Beloit 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 Regal Beloit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Regal Beloit.
Diversification Opportunities for Illinois Tool and Regal Beloit
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Illinois and Regal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Regal Beloit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Beloit 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 Regal Beloit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Beloit has no effect on the direction of Illinois Tool i.e., Illinois Tool and Regal Beloit go up and down completely randomly.
Pair Corralation between Illinois Tool and Regal Beloit
Considering the 90-day investment horizon Illinois Tool Works is expected to generate 0.44 times more return on investment than Regal Beloit. However, Illinois Tool Works is 2.26 times less risky than Regal Beloit. It trades about -0.03 of its potential returns per unit of risk. Regal Beloit is currently generating about -0.39 per unit of risk. If you would invest 26,442 in Illinois Tool Works on November 28, 2024 and sell it today you would lose (199.50) from holding Illinois Tool Works or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illinois Tool Works vs. Regal Beloit
Performance |
| Timeline |
| Illinois Tool Works |
| Regal Beloit |
Illinois Tool and Regal Beloit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Regal Beloit
The main advantage of trading using opposite Illinois Tool and Regal Beloit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Regal Beloit 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 Regal Beloit will offset losses from the drop in Regal Beloit's long position.| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
| Regal Beloit vs. IDEX Corporation | Regal Beloit vs. Watts Water Technologies | Regal Beloit vs. Donaldson | Regal Beloit 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |