Correlation Between Ingersoll Rand and Global X

Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ingersoll Rand and Global X Funds, you can compare the effects of market volatilities on Ingersoll Rand and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Global X.

Diversification Opportunities for Ingersoll Rand and Global X

0.89

Correlation Coefficient

Ingersoll Rand  Global X

Very poor diversification

The 3 months correlation between Ingersoll and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Global X go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Global X

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to under-perform the Global X. In addition to that, Ingersoll Rand is 1.35 times more volatile than Global X Funds. It trades about -0.23 of its total potential returns per unit of risk. Global X Funds is currently generating about -0.23 per unit of volatility. If you would invest  3,093  in Global X Funds on January 20, 2024 and sell it today you would lose (114.00) from holding Global X Funds or give up 3.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ingersoll Rand  vs.  Global X Funds

Ingersoll Rand

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ingersoll Rand may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Global X Funds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Ingersoll Rand and Global X

The main advantage of trading using opposite Ingersoll Rand and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.

The idea behind Ingersoll Rand and Global X Funds 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .