Correlation Between Xometry and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Xometry 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 Xometry and Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xometry and Illinois Tool Works, you can compare the effects of market volatilities on Xometry 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 Xometry with a short position of Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xometry and Illinois Tool.
Diversification Opportunities for Xometry and Illinois Tool
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xometry and Illinois is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Xometry 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 Xometry 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 Xometry 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 Xometry i.e., Xometry and Illinois Tool go up and down completely randomly.
Pair Corralation between Xometry and Illinois Tool
Given the investment horizon of 90 days Xometry is expected to generate 4.65 times more return on investment than Illinois Tool. However, Xometry is 4.65 times more volatile than Illinois Tool Works. It trades about 0.01 of its potential returns per unit of risk. Illinois Tool Works is currently generating about 0.05 per unit of risk. If you would invest 4,387 in Xometry on August 24, 2024 and sell it today you would lose (1,280) from holding Xometry or give up 29.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xometry vs. Illinois Tool Works
Performance |
| Timeline |
| Xometry |
| Illinois Tool Works |
Xometry and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xometry and Illinois Tool
The main advantage of trading using opposite Xometry and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xometry 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.The idea behind Xometry and Illinois Tool Works 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.| Illinois Tool vs. Small Cap Core | Illinois Tool vs. Freedom Holding Corp | Illinois Tool vs. Gfl Environmental Holdings | Illinois Tool vs. Growth Fund Of |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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