Correlation Between EVI Industries and Global Industrial
Can any of the company-specific risk be diversified away by investing in both EVI Industries and Global 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 EVI Industries and Global Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVI Industries and Global Industrial Co, you can compare the effects of market volatilities on EVI Industries and Global 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 EVI Industries with a short position of Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVI Industries and Global Industrial.
Diversification Opportunities for EVI Industries and Global Industrial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EVI and Global is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial 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 Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of EVI Industries i.e., EVI Industries and Global Industrial go up and down completely randomly.
Pair Corralation between EVI Industries and Global Industrial
Considering the 90-day investment horizon EVI Industries is expected to generate 2.54 times less return on investment than Global Industrial. In addition to that, EVI Industries is 1.41 times more volatile than Global Industrial Co. It trades about 0.03 of its total potential returns per unit of risk. Global Industrial Co is currently generating about 0.1 per unit of volatility. If you would invest 2,399 in Global Industrial Co on November 5, 2024 and sell it today you would earn a total of 72.00 from holding Global Industrial Co or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVI Industries vs. Global Industrial Co
Performance |
| Timeline |
| EVI Industries |
| Global Industrial |
EVI Industries and Global Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVI Industries and Global Industrial
The main advantage of trading using opposite EVI Industries and Global Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVI Industries position performs unexpectedly, Global 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 Global Industrial will offset losses from the drop in Global Industrial's long position.| EVI Industries vs. DXP Enterprises | EVI Industries vs. Global Industrial Co | EVI Industries vs. Core Main | EVI Industries vs. Watsco Inc |
| Global Industrial vs. Distribution Solutions Group | Global Industrial vs. Core Main | Global Industrial vs. Applied Industrial Technologies | Global Industrial vs. BlueLinx Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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