Correlation Between Franklin Electric and Ingersoll Rand
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Ingersoll Rand 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 Franklin Electric and Ingersoll Rand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Electric Co and Ingersoll Rand, you can compare the effects of market volatilities on Franklin Electric and Ingersoll Rand 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 Franklin Electric with a short position of Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Ingersoll Rand.
Diversification Opportunities for Franklin Electric and Ingersoll Rand
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Ingersoll is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Franklin Electric 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 Franklin Electric Co are associated (or correlated) with Ingersoll Rand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingersoll Rand has no effect on the direction of Franklin Electric i.e., Franklin Electric and Ingersoll Rand go up and down completely randomly.
Pair Corralation between Franklin Electric and Ingersoll Rand
Given the investment horizon of 90 days Franklin Electric is expected to generate 2.62 times less return on investment than Ingersoll Rand. But when comparing it to its historical volatility, Franklin Electric Co is 1.02 times less risky than Ingersoll Rand. It trades about 0.05 of its potential returns per unit of risk. Ingersoll Rand is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,852 in Ingersoll Rand on January 19, 2024 and sell it today you would earn a total of 4,199 from holding Ingersoll Rand or generate 86.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Electric Co vs. Ingersoll Rand
Performance |
| Timeline |
| Franklin Electric |
| Ingersoll Rand |
Franklin Electric and Ingersoll Rand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Ingersoll Rand
The main advantage of trading using opposite Franklin Electric and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Ingersoll Rand 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 Ingersoll Rand will offset losses from the drop in Ingersoll Rand's long position.| Franklin Electric vs. Illinois Tool Works | Franklin Electric vs. Dover | Franklin Electric vs. Cummins | Franklin Electric vs. Eaton PLC |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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