Correlation Between Ametek and Ingersoll Rand

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

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

Diversification Opportunities for Ametek and Ingersoll Rand

0.58

Correlation Coefficient

Ametek  Ingersoll Rand

Very weak diversification

The 3 months correlation between Ametek and Ingersoll is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Ametek 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 Ametek Inc 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 Ametek i.e., Ametek and Ingersoll Rand go up and down completely randomly.

Pair Corralation between Ametek and Ingersoll Rand

Considering the 90-day investment horizon Ametek Inc is expected to generate 0.75 times more return on investment than Ingersoll Rand. However, Ametek Inc is 1.34 times less risky than Ingersoll Rand. It trades about -0.34 of its potential returns per unit of risk. Ingersoll Rand is currently generating about -0.49 per unit of risk. If you would invest  19,684  in Ametek Inc on September 25, 2024 and sell it today you would lose (1,279) from holding Ametek Inc or give up 6.5% of portfolio value over 90 days.

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

Ametek Inc  vs.  Ingersoll Rand

Ametek Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ingersoll Rand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingersoll Rand has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Ametek and Ingersoll Rand

The main advantage of trading using opposite Ametek and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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.

The idea behind Ametek Inc and Ingersoll Rand 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.