Correlation Between Applied Industrial and Transcat
Can any of the company-specific risk be diversified away by investing in both Applied Industrial and Transcat 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 Applied Industrial and Transcat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Industrial Technologies and Transcat, you can compare the effects of market volatilities on Applied Industrial and Transcat 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 Applied Industrial with a short position of Transcat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Industrial and Transcat.
Diversification Opportunities for Applied Industrial and Transcat
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and Transcat is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Applied Industrial Technologie and Transcat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcat and Applied Industrial 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 Applied Industrial Technologies are associated (or correlated) with Transcat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcat has no effect on the direction of Applied Industrial i.e., Applied Industrial and Transcat go up and down completely randomly.
Pair Corralation between Applied Industrial and Transcat
Considering the 90-day investment horizon Applied Industrial Technologies is expected to generate 1.12 times more return on investment than Transcat. However, Applied Industrial is 1.12 times more volatile than Transcat. It trades about 0.27 of its potential returns per unit of risk. Transcat is currently generating about 0.17 per unit of risk. If you would invest 23,118 in Applied Industrial Technologies on September 2, 2024 and sell it today you would earn a total of 4,354 from holding Applied Industrial Technologies or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Industrial Technologie vs. Transcat
Performance |
| Timeline |
| Applied Industrial |
| Transcat |
Applied Industrial and Transcat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Industrial and Transcat
The main advantage of trading using opposite Applied Industrial and Transcat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Industrial position performs unexpectedly, Transcat 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 Transcat will offset losses from the drop in Transcat's long position.| Applied Industrial vs. Oil States International | Applied Industrial vs. Oceaneering International | Applied Industrial vs. Geospace Technologies | Applied Industrial vs. Newpark Resources |
| Transcat vs. BlueLinx Holdings | Transcat vs. SiteOne Landscape Supply | Transcat vs. DXP Enterprises | Transcat vs. Core Main |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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