Correlation Between Ingersoll Rand and Crane
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Crane 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 Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Crane Company, you can compare the effects of market volatilities on Ingersoll Rand and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Crane.
Diversification Opportunities for Ingersoll Rand and Crane
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ingersoll and Crane is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Crane go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Crane
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.44 times less return on investment than Crane. But when comparing it to its historical volatility, Ingersoll Rand is 1.45 times less risky than Crane. It trades about 0.15 of its potential returns per unit of risk. Crane Company is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,193 in Crane Company on January 26, 2024 and sell it today you would earn a total of 7,020 from holding Crane Company or generate 97.59% 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. Crane Company
Performance |
| Timeline |
| Ingersoll Rand |
| Crane Company |
Ingersoll Rand and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Crane
The main advantage of trading using opposite Ingersoll Rand and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Ingersoll Rand vs. Parker Hannifin | Ingersoll Rand vs. Emerson Electric | Ingersoll Rand vs. Smith AO | Ingersoll Rand vs. Watts Water Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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