Correlation Between Core Main and Applied Industrial
Can any of the company-specific risk be diversified away by investing in both Core Main and Applied Industrial 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 Core Main and Applied Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Main and Applied Industrial Technologies, you can compare the effects of market volatilities on Core Main and Applied Industrial 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 Core Main with a short position of Applied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Main and Applied Industrial.
Diversification Opportunities for Core Main and Applied Industrial
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Core and Applied is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and Applied Industrial Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Industrial and Core Main 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 Core Main are associated (or correlated) with Applied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Industrial has no effect on the direction of Core Main i.e., Core Main and Applied Industrial go up and down completely randomly.
Pair Corralation between Core Main and Applied Industrial
Considering the 90-day investment horizon Core Main is expected to generate 1.22 times more return on investment than Applied Industrial. However, Core Main is 1.22 times more volatile than Applied Industrial Technologies. It trades about 0.08 of its potential returns per unit of risk. Applied Industrial Technologies is currently generating about 0.09 per unit of risk. If you would invest 2,061 in Core Main on August 23, 2024 and sell it today you would earn a total of 2,396 from holding Core Main or generate 116.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Main vs. Applied Industrial Technologie
Performance |
| Timeline |
| Core Main |
| Applied Industrial |
Core Main and Applied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Main and Applied Industrial
The main advantage of trading using opposite Core Main and Applied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Main position performs unexpectedly, Applied Industrial 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 Applied Industrial will offset losses from the drop in Applied Industrial's long position.| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx Holdings |
| Applied Industrial vs. Core Main | Applied Industrial vs. WW Grainger | Applied Industrial vs. DXP Enterprises | Applied Industrial vs. SiteOne Landscape Supply |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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