Correlation Between ABB and Illinois Tool

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

Diversification Opportunities for ABB and Illinois Tool

-0.81
  Correlation Coefficient
 ABB

Pay attention - limited upside

The 3 months correlation between ABB and Illinois is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding ABB Ltd ADR 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 ABB 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 ABB Ltd ADR 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 ABB i.e., ABB and Illinois Tool go up and down completely randomly.

Pair Corralation between ABB and Illinois Tool

If you would invest  3,900  in ABB Ltd ADR on March 6, 2024 and sell it today you would earn a total of  0.00  from holding ABB Ltd ADR or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy5.0%
ValuesDaily Returns

ABB Ltd ADR  vs.  Illinois Tool Works

 Performance 
       Timeline  
ABB Ltd ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ABB Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ABB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Illinois Tool Works 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Illinois Tool Works has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

ABB and Illinois Tool Volatility Contrast

   Predicted Return Density   
       Returns  
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