Correlation Between EVI Industries and DXP Enterprises
Can any of the company-specific risk be diversified away by investing in both EVI Industries and DXP Enterprises 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 EVI Industries and DXP Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVI Industries and DXP Enterprises, you can compare the effects of market volatilities on EVI Industries and DXP Enterprises 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 EVI Industries with a short position of DXP Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVI Industries and DXP Enterprises.
Diversification Opportunities for EVI Industries and DXP Enterprises
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EVI and DXP is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and DXP Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXP Enterprises and EVI Industries 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 EVI Industries are associated (or correlated) with DXP Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXP Enterprises has no effect on the direction of EVI Industries i.e., EVI Industries and DXP Enterprises go up and down completely randomly.
Pair Corralation between EVI Industries and DXP Enterprises
Considering the 90-day investment horizon EVI Industries is expected to generate 4.46 times less return on investment than DXP Enterprises. In addition to that, EVI Industries is 1.45 times more volatile than DXP Enterprises. It trades about 0.01 of its total potential returns per unit of risk. DXP Enterprises is currently generating about 0.09 per unit of volatility. If you would invest 2,600 in DXP Enterprises on August 27, 2024 and sell it today you would earn a total of 4,533 from holding DXP Enterprises or generate 174.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVI Industries vs. DXP Enterprises
Performance |
| Timeline |
| EVI Industries |
| DXP Enterprises |
EVI Industries and DXP Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVI Industries and DXP Enterprises
The main advantage of trading using opposite EVI Industries and DXP Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVI Industries position performs unexpectedly, DXP Enterprises 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 DXP Enterprises will offset losses from the drop in DXP Enterprises' long position.| EVI Industries vs. DXP Enterprises | EVI Industries vs. Global Industrial Co | EVI Industries vs. Core Main | EVI Industries vs. Watsco Inc |
| DXP Enterprises vs. Global Industrial Co | DXP Enterprises vs. BlueLinx Holdings | DXP Enterprises vs. WESCO International | DXP Enterprises vs. MSC Industrial Direct |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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