Correlation Between Ingersoll Rand and Ametek
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Ametek 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 Ametek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Ametek Inc, you can compare the effects of market volatilities on Ingersoll Rand and Ametek 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 Ametek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Ametek.
Diversification Opportunities for Ingersoll Rand and Ametek
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ingersoll and Ametek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc 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 Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Ametek go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Ametek
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.37 times more return on investment than Ametek. However, Ingersoll Rand is 1.37 times more volatile than Ametek Inc. It trades about 0.09 of its potential returns per unit of risk. Ametek Inc is currently generating about 0.07 per unit of risk. If you would invest 4,705 in Ingersoll Rand on January 20, 2024 and sell it today you would earn a total of 4,192 from holding Ingersoll Rand or generate 89.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ingersoll Rand vs. Ametek Inc
Performance |
Timeline |
Ingersoll Rand |
Ametek Inc |
Ingersoll Rand and Ametek Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ingersoll Rand and Ametek
The main advantage of trading using opposite Ingersoll Rand and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.Ingersoll Rand vs. Emerson Electric | Ingersoll Rand vs. Smith AO | Ingersoll Rand vs. Eaton PLC | Ingersoll Rand vs. Graco Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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