Correlation Between Small Cap and Ingersoll Rand
Can any of the company-specific risk be diversified away by investing in both Small Cap and Ingersoll Rand 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 Small Cap and Ingersoll Rand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Core and Ingersoll Rand, you can compare the effects of market volatilities on Small Cap and Ingersoll Rand 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 Small Cap with a short position of Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Ingersoll Rand.
Diversification Opportunities for Small Cap and Ingersoll Rand
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Ingersoll is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Small Cap 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 Small Cap Core are associated (or correlated) with Ingersoll Rand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingersoll Rand has no effect on the direction of Small Cap i.e., Small Cap and Ingersoll Rand go up and down completely randomly.
Pair Corralation between Small Cap and Ingersoll Rand
Assuming the 90 days horizon Small Cap Core is expected to generate 0.47 times more return on investment than Ingersoll Rand. However, Small Cap Core is 2.14 times less risky than Ingersoll Rand. It trades about 0.0 of its potential returns per unit of risk. Ingersoll Rand is currently generating about -0.15 per unit of risk. If you would invest 1,237 in Small Cap Core on November 18, 2024 and sell it today you would lose (2.00) from holding Small Cap Core or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Core vs. Ingersoll Rand
Performance |
| Timeline |
| Small Cap Core |
| Ingersoll Rand |
Small Cap and Ingersoll Rand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Ingersoll Rand
The main advantage of trading using opposite Small Cap and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Ingersoll Rand 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 Ingersoll Rand will offset losses from the drop in Ingersoll Rand's long position.| Small Cap vs. Arrow Managed Futures | Small Cap vs. Intal High Relative | Small Cap vs. Fbanjx | Small Cap vs. Ffcdax |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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