Correlation Between Interface and Trane Technologies

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Can any of the company-specific risk be diversified away by investing in both Interface and Trane Technologies 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 Interface and Trane Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interface and Trane Technologies plc, you can compare the effects of market volatilities on Interface and Trane Technologies 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 Interface with a short position of Trane Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interface and Trane Technologies.

Diversification Opportunities for Interface and Trane Technologies

InterfaceTraneDiversified AwayInterfaceTraneDiversified Away100%
0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Interface and Trane is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Interface and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies plc and Interface 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 Interface are associated (or correlated) with Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of Interface i.e., Interface and Trane Technologies go up and down completely randomly.

Pair Corralation between Interface and Trane Technologies

Given the investment horizon of 90 days Interface is expected to under-perform the Trane Technologies. In addition to that, Interface is 2.71 times more volatile than Trane Technologies plc. It trades about -0.29 of its total potential returns per unit of risk. Trane Technologies plc is currently generating about -0.16 per unit of volatility. If you would invest  36,576  in Trane Technologies plc on November 29, 2024 and sell it today you would lose (1,517) from holding Trane Technologies plc or give up 4.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Interface  vs.  Trane Technologies plc

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.15TILE TT
       Timeline  
Interface 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Interface has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb18192021222324252627
Trane Technologies plc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Trane Technologies plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb340350360370380390400410420

Interface and Trane Technologies Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.05-3.04-2.02-1.00.00.891.782.673.56 0.050.100.15
JavaScript chart by amCharts 3.21.15TILE TT
       Returns  

Pair Trading with Interface and Trane Technologies

The main advantage of trading using opposite Interface and Trane Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interface position performs unexpectedly, Trane Technologies 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 Trane Technologies will offset losses from the drop in Trane Technologies' long position.
The idea behind Interface and Trane Technologies plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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