Correlation Between Nordson and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Nordson 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 Nordson and Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordson and Illinois Tool Works, you can compare the effects of market volatilities on Nordson 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 Nordson with a short position of Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordson and Illinois Tool.
Diversification Opportunities for Nordson and Illinois Tool
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nordson and Illinois is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nordson 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 Nordson 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 Nordson 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 Nordson i.e., Nordson and Illinois Tool go up and down completely randomly.
Pair Corralation between Nordson and Illinois Tool
Given the investment horizon of 90 days Nordson is expected to generate 1.14 times more return on investment than Illinois Tool. However, Nordson is 1.14 times more volatile than Illinois Tool Works. It trades about 0.25 of its potential returns per unit of risk. Illinois Tool Works is currently generating about 0.08 per unit of risk. If you would invest 20,696 in Nordson on November 7, 2024 and sell it today you would earn a total of 1,326 from holding Nordson or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Nordson vs. Illinois Tool Works
Performance |
| Timeline |
| Nordson |
| Illinois Tool Works |
Nordson and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordson and Illinois Tool
The main advantage of trading using opposite Nordson and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordson 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.| Nordson vs. Illinois Tool Works | Nordson vs. Pentair PLC | Nordson vs. Parker Hannifin | Nordson vs. Emerson Electric |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |