Correlation Between Trane Technologies and Kingspan Group
Can any of the company-specific risk be diversified away by investing in both Trane Technologies and Kingspan Group 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 Trane Technologies and Kingspan Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trane Technologies plc and Kingspan Group PLC, you can compare the effects of market volatilities on Trane Technologies and Kingspan Group 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 Trane Technologies with a short position of Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trane Technologies and Kingspan Group.
Diversification Opportunities for Trane Technologies and Kingspan Group
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trane and Kingspan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Trane Technologies plc and Kingspan Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group PLC and Trane Technologies 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 Trane Technologies plc are associated (or correlated) with Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group PLC has no effect on the direction of Trane Technologies i.e., Trane Technologies and Kingspan Group go up and down completely randomly.
Pair Corralation between Trane Technologies and Kingspan Group
Allowing for the 90-day total investment horizon Trane Technologies plc is expected to generate 0.87 times more return on investment than Kingspan Group. However, Trane Technologies plc is 1.15 times less risky than Kingspan Group. It trades about 0.19 of its potential returns per unit of risk. Kingspan Group PLC is currently generating about -0.31 per unit of risk. If you would invest 39,276 in Trane Technologies plc on August 28, 2024 and sell it today you would earn a total of 2,638 from holding Trane Technologies plc or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trane Technologies plc vs. Kingspan Group PLC
Performance |
| Timeline |
| Trane Technologies plc |
| Kingspan Group PLC |
Trane Technologies and Kingspan Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trane Technologies and Kingspan Group
The main advantage of trading using opposite Trane Technologies and Kingspan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trane Technologies position performs unexpectedly, Kingspan Group 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 Kingspan Group will offset losses from the drop in Kingspan Group's long position.| Trane Technologies vs. Fortune Brands Innovations | Trane Technologies vs. Johnson Controls International | Trane Technologies vs. Lennox International | Trane Technologies vs. Builders FirstSource |
| Kingspan Group vs. Trane Technologies plc | Kingspan Group vs. Carrier Global Corp | Kingspan Group vs. Johnson Controls International | Kingspan Group vs. Lennox International |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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