Correlation Between Middleby Corp and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Middleby Corp and Illinois Tool 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 Middleby Corp and Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Middleby Corp and Illinois Tool Works, you can compare the effects of market volatilities on Middleby Corp and Illinois Tool 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 Middleby Corp with a short position of Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middleby Corp and Illinois Tool.
Diversification Opportunities for Middleby Corp and Illinois Tool
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Middleby and Illinois is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Middleby Corp and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works and Middleby Corp 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 Middleby Corp are associated (or correlated) with Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of Middleby Corp i.e., Middleby Corp and Illinois Tool go up and down completely randomly.
Pair Corralation between Middleby Corp and Illinois Tool
Given the investment horizon of 90 days Middleby Corp is expected to generate 2.91 times less return on investment than Illinois Tool. In addition to that, Middleby Corp is 1.51 times more volatile than Illinois Tool Works. It trades about 0.01 of its total potential returns per unit of risk. Illinois Tool Works is currently generating about 0.05 per unit of volatility. If you would invest 21,009 in Illinois Tool Works on August 30, 2024 and sell it today you would earn a total of 6,595 from holding Illinois Tool Works or generate 31.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Middleby Corp vs. Illinois Tool Works
Performance |
| Timeline |
| Middleby Corp |
| Illinois Tool Works |
Middleby Corp and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middleby Corp and Illinois Tool
The main advantage of trading using opposite Middleby Corp and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middleby Corp position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool's long position.| Middleby Corp vs. Enpro Industries | Middleby Corp vs. Kadant Inc | Middleby Corp vs. ITT Inc | Middleby Corp vs. Franklin Electric Co |
| Illinois Tool vs. Pentair PLC | Illinois Tool vs. Parker Hannifin | Illinois Tool vs. Emerson Electric | Illinois Tool vs. Smith AO |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |