Correlation Between Interface and Trane Technologies

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

By analyzing existing cross correlation between Interface and Trane Technologies plc, you can compare the effects of market volatilities on Interface and Trane Technologies 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 Interface with a short position of Trane Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interface and Trane Technologies.

Diversification Opportunities for Interface and Trane Technologies

0.12

Correlation Coefficient

Interface  Trane Technologies

Average diversification

The 3 months correlation between Interface and Trane is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Interface and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies plc and Interface 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 Interface are associated (or correlated) with Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of Interface i.e., Interface and Trane Technologies go up and down completely randomly.

Pair Corralation between Interface and Trane Technologies

Given the investment horizon of 90 days Interface is expected to generate 2.06 times more return on investment than Trane Technologies. However, Interface is 2.06 times more volatile than Trane Technologies plc. It trades about 0.1 of its potential returns per unit of risk. Trane Technologies plc is currently generating about 0.03 per unit of risk. If you would invest  2,100  in Interface on May 13, 2025 and sell it today you would earn a total of  391.00  from holding Interface or generate 18.62% return on investment over 90 days.

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

Interface  vs.  Trane Technologies plc

Interface

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Interface exhibited solid returns over the last few months and may actually be approaching a breakup point.

Trane Technologies plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trane Technologies plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Trane Technologies is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Interface and Trane Technologies

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

The idea behind Interface and Trane Technologies plc 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.