Correlation Between Ingersoll Rand and General Electric

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Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand and General Electric 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 General Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and General Electric, you can compare the effects of market volatilities on Ingersoll Rand and General Electric 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 General Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and General Electric.

Diversification Opportunities for Ingersoll Rand and General Electric

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Ingersoll and General is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Electric 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 General Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Electric has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and General Electric go up and down completely randomly.

Pair Corralation between Ingersoll Rand and General Electric

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to under-perform the General Electric. In addition to that, Ingersoll Rand is 1.11 times more volatile than General Electric. It trades about -0.15 of its total potential returns per unit of risk. General Electric is currently generating about -0.15 per unit of volatility. If you would invest  7,391  in General Electric on June 29, 2022 and sell it today you would lose (894.00)  from holding General Electric or give up 12.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ingersoll Rand  vs.  General Electric

 Performance (%) 
       Timeline  
Ingersoll Rand 
Ingersoll Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Ingersoll Rand is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ingersoll Price Channel

General Electric 
General Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, General Electric is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

General Price Channel

Ingersoll Rand and General Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ingersoll Rand and General Electric

The main advantage of trading using opposite Ingersoll Rand and General Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand position performs unexpectedly, General Electric 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 General Electric will offset losses from the drop in General Electric's long position.
Ingersoll Rand vs. Clearwater Paper Corp
The idea behind Ingersoll Rand and General Electric 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.
General Electric vs. Clearwater Paper Corp
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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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