Correlation Between Ingersoll Rand and Hillenbrand
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Hillenbrand 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 Ingersoll Rand and Hillenbrand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Hillenbrand, you can compare the effects of market volatilities on Ingersoll Rand and Hillenbrand 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 Ingersoll Rand with a short position of Hillenbrand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Hillenbrand.
Diversification Opportunities for Ingersoll Rand and Hillenbrand
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingersoll and Hillenbrand is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Ingersoll Rand 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 Ingersoll Rand are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Hillenbrand go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Hillenbrand
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 0.85 times more return on investment than Hillenbrand. However, Ingersoll Rand is 1.18 times less risky than Hillenbrand. It trades about 0.09 of its potential returns per unit of risk. Hillenbrand is currently generating about 0.03 per unit of risk. If you would invest 4,443 in Ingersoll Rand on January 20, 2024 and sell it today you would earn a total of 4,397 from holding Ingersoll Rand or generate 98.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingersoll Rand vs. Hillenbrand
Performance |
| Timeline |
| Ingersoll Rand |
| Hillenbrand |
Ingersoll Rand and Hillenbrand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Hillenbrand
The main advantage of trading using opposite Ingersoll Rand and Hillenbrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Hillenbrand 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 Hillenbrand will offset losses from the drop in Hillenbrand's long position.| Ingersoll Rand vs. Emerson Electric | Ingersoll Rand vs. Smith AO | Ingersoll Rand vs. Eaton PLC | Ingersoll Rand vs. Cummins |
| Hillenbrand vs. Emerson Electric | Hillenbrand vs. Smith AO | Hillenbrand vs. Eaton PLC | Hillenbrand vs. Cummins |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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