Correlation Between EVI Industries and WW Grainger
Can any of the company-specific risk be diversified away by investing in both EVI Industries and WW Grainger 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 WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVI Industries and WW Grainger, you can compare the effects of market volatilities on EVI Industries and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVI Industries and WW Grainger.
Diversification Opportunities for EVI Industries and WW Grainger
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EVI and GWW is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of EVI Industries i.e., EVI Industries and WW Grainger go up and down completely randomly.
Pair Corralation between EVI Industries and WW Grainger
Considering the 90-day investment horizon EVI Industries is expected to under-perform the WW Grainger. In addition to that, EVI Industries is 2.29 times more volatile than WW Grainger. It trades about -0.03 of its total potential returns per unit of risk. WW Grainger is currently generating about 0.24 per unit of volatility. If you would invest 109,065 in WW Grainger on August 24, 2024 and sell it today you would earn a total of 10,376 from holding WW Grainger or generate 9.51% 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. WW Grainger
Performance |
| Timeline |
| EVI Industries |
| WW Grainger |
EVI Industries and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVI Industries and WW Grainger
The main advantage of trading using opposite EVI Industries and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVI Industries position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| EVI Industries vs. DXP Enterprises | EVI Industries vs. Global Industrial Co | EVI Industries vs. Core Main | EVI Industries vs. Watsco Inc |
| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial Technologies |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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