Correlation Between Distribution Solutions and Applied Industrial
Can any of the company-specific risk be diversified away by investing in both Distribution Solutions 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 Distribution Solutions and Applied Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribution Solutions Group and Applied Industrial Technologies, you can compare the effects of market volatilities on Distribution Solutions 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 Distribution Solutions with a short position of Applied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribution Solutions and Applied Industrial.
Diversification Opportunities for Distribution Solutions and Applied Industrial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Distribution and Applied is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Distribution Solutions Group and Applied Industrial Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Industrial and Distribution Solutions 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 Distribution Solutions Group 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 Distribution Solutions i.e., Distribution Solutions and Applied Industrial go up and down completely randomly.
Pair Corralation between Distribution Solutions and Applied Industrial
Given the investment horizon of 90 days Distribution Solutions Group is expected to under-perform the Applied Industrial. In addition to that, Distribution Solutions is 1.44 times more volatile than Applied Industrial Technologies. It trades about -0.14 of its total potential returns per unit of risk. Applied Industrial Technologies is currently generating about 0.25 per unit of volatility. If you would invest 24,345 in Applied Industrial Technologies on October 20, 2024 and sell it today you would earn a total of 1,394 from holding Applied Industrial Technologies or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Distribution Solutions Group vs. Applied Industrial Technologie
Performance |
| Timeline |
| Distribution Solutions |
| Applied Industrial |
Distribution Solutions and Applied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribution Solutions and Applied Industrial
The main advantage of trading using opposite Distribution Solutions and Applied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribution Solutions 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.| Distribution Solutions vs. Global Industrial Co | Distribution Solutions vs. Core Main | Distribution Solutions vs. Applied Industrial Technologies | Distribution Solutions 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |