Correlation Between Trane Technologies and Masco
Can any of the company-specific risk be diversified away by investing in both Trane Technologies and Masco 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 Masco 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 Masco, you can compare the effects of market volatilities on Trane Technologies and Masco 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 Masco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trane Technologies and Masco.
Diversification Opportunities for Trane Technologies and Masco
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Trane and Masco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Trane Technologies plc and Masco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masco 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 Masco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masco has no effect on the direction of Trane Technologies i.e., Trane Technologies and Masco go up and down completely randomly.
Pair Corralation between Trane Technologies and Masco
Allowing for the 90-day total investment horizon Trane Technologies plc is expected to generate 1.01 times more return on investment than Masco. However, Trane Technologies is 1.01 times more volatile than Masco. It trades about 0.1 of its potential returns per unit of risk. Masco is currently generating about 0.06 per unit of risk. If you would invest 18,096 in Trane Technologies plc on November 5, 2024 and sell it today you would earn a total of 18,179 from holding Trane Technologies plc or generate 100.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trane Technologies plc vs. Masco
Performance |
| Timeline |
| Trane Technologies plc |
| Masco |
Trane Technologies and Masco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trane Technologies and Masco
The main advantage of trading using opposite Trane Technologies and Masco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trane Technologies position performs unexpectedly, Masco 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 Masco will offset losses from the drop in Masco'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 |
| Masco vs. Trane Technologies plc | Masco vs. Quanex Building Products | Masco vs. Jeld Wen Holding | Masco vs. Azek Company |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |