Correlation Between Ingersoll Rand and Crane Holdings

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Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and Crane Holdings 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 Holdings 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 Holdings CO, you can compare the effects of market volatilities on Ingersoll Rand and Crane Holdings 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 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Crane Holdings.

Diversification Opportunities for Ingersoll Rand and Crane Holdings

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Ingersoll and Crane is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Crane Holdings CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Holdings CO 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 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Holdings CO has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Crane Holdings go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Crane Holdings

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 1.23 times less return on investment than Crane Holdings. In addition to that, Ingersoll Rand is 1.0 times more volatile than Crane Holdings CO. It trades about 0.03 of its total potential returns per unit of risk. Crane Holdings CO is currently generating about 0.04 per unit of volatility. If you would invest  8,867  in Crane Holdings CO on May 17, 2022 and sell it today you would earn a total of  1,716  from holding Crane Holdings CO or generate 19.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ingersoll Rand  vs.  Crane Holdings CO

 Performance (%) 
       Timeline  
Ingersoll Rand 
Ingersoll Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Ingersoll Rand reported solid returns over the last few months and may actually be approaching a breakup point.

Ingersoll Price Channel

Crane Holdings CO 
Crane Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Crane Holdings CO are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Crane Holdings may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Crane Price Channel

Ingersoll Rand and Crane Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ingersoll Rand and Crane Holdings

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

Ingersoll Rand

Pair trading matchups for Ingersoll Rand

The idea behind Ingersoll Rand and Crane Holdings CO 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.

Crane Holdings CO

Pair trading matchups for Crane Holdings

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

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