Correlation Between Illinois Tool and Nuscale Power
Can any of the company-specific risk be diversified away by investing in both Illinois Tool and Nuscale Power 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 Nuscale Power 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 Nuscale Power Corp, you can compare the effects of market volatilities on Illinois Tool and Nuscale Power 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 Nuscale Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illinois Tool and Nuscale Power.
Diversification Opportunities for Illinois Tool and Nuscale Power
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Illinois and Nuscale is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power Corp 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Illinois Tool i.e., Illinois Tool and Nuscale Power go up and down completely randomly.
Pair Corralation between Illinois Tool and Nuscale Power
Considering the 90-day investment horizon Illinois Tool is expected to generate 7.8 times less return on investment than Nuscale Power. But when comparing it to its historical volatility, Illinois Tool Works is 5.86 times less risky than Nuscale Power. It trades about 0.05 of its potential returns per unit of risk. Nuscale Power Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,089 in Nuscale Power Corp on August 24, 2024 and sell it today you would earn a total of 1,678 from holding Nuscale Power Corp or generate 154.09% 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. Nuscale Power Corp
Performance |
| Timeline |
| Illinois Tool Works |
| Nuscale Power Corp |
Illinois Tool and Nuscale Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illinois Tool and Nuscale Power
The main advantage of trading using opposite Illinois Tool and Nuscale Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illinois Tool position performs unexpectedly, Nuscale Power 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 Nuscale Power will offset losses from the drop in Nuscale Power's long position.| Illinois Tool vs. Small Cap Core | Illinois Tool vs. Freedom Holding Corp | Illinois Tool vs. Gfl Environmental Holdings | Illinois Tool vs. Growth Fund Of |
| Nuscale Power vs. Cummins | Nuscale Power vs. Chart Industries | Nuscale Power vs. GE Aerospace | Nuscale Power vs. Nel ASA |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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