Correlation Between John Bean and ITT
Can any of the company-specific risk be diversified away by investing in both John Bean and ITT 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 John Bean and ITT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and ITT Inc, you can compare the effects of market volatilities on John Bean and ITT 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 John Bean with a short position of ITT. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and ITT.
Diversification Opportunities for John Bean and ITT
Poor diversification
The 3 months correlation between John and ITT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and ITT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITT Inc and John Bean 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 John Bean Technologies are associated (or correlated) with ITT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITT Inc has no effect on the direction of John Bean i.e., John Bean and ITT go up and down completely randomly.
Pair Corralation between John Bean and ITT
Considering the 90-day investment horizon John Bean is expected to generate 1.81 times less return on investment than ITT. In addition to that, John Bean is 1.33 times more volatile than ITT Inc. It trades about 0.03 of its total potential returns per unit of risk. ITT Inc is currently generating about 0.08 per unit of volatility. If you would invest 8,312 in ITT Inc on August 23, 2024 and sell it today you would earn a total of 6,908 from holding ITT Inc or generate 83.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. ITT Inc
Performance |
| Timeline |
| John Bean Technologies |
| ITT Inc |
John Bean and ITT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and ITT
The main advantage of trading using opposite John Bean and ITT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, ITT 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 ITT will offset losses from the drop in ITT's long position.| John Bean vs. Small Cap Core | John Bean vs. Freedom Holding Corp | John Bean vs. Gfl Environmental Holdings | John Bean vs. Growth Fund Of |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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