Correlation Between EVI Industries and WESCO International
Can any of the company-specific risk be diversified away by investing in both EVI Industries and WESCO International 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 WESCO International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVI Industries and WESCO International, you can compare the effects of market volatilities on EVI Industries and WESCO International 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 WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVI Industries and WESCO International.
Diversification Opportunities for EVI Industries and WESCO International
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EVI and WESCO is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International 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 WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of EVI Industries i.e., EVI Industries and WESCO International go up and down completely randomly.
Pair Corralation between EVI Industries and WESCO International
Considering the 90-day investment horizon EVI Industries is expected to generate 2.65 times less return on investment than WESCO International. In addition to that, EVI Industries is 1.23 times more volatile than WESCO International. It trades about 0.01 of its total potential returns per unit of risk. WESCO International is currently generating about 0.04 per unit of volatility. If you would invest 17,458 in WESCO International on August 28, 2024 and sell it today you would earn a total of 3,861 from holding WESCO International or generate 22.12% 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. WESCO International
Performance |
| Timeline |
| EVI Industries |
| WESCO International |
EVI Industries and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVI Industries and WESCO International
The main advantage of trading using opposite EVI Industries and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVI Industries position performs unexpectedly, WESCO International 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 WESCO International will offset losses from the drop in WESCO International's long position.| EVI Industries vs. DXP Enterprises | EVI Industries vs. Global Industrial Co | EVI Industries vs. Core Main | EVI Industries vs. Watsco Inc |
| WESCO International vs. DXP Enterprises | WESCO International vs. Applied Industrial Technologies | WESCO International vs. Ferguson Plc | WESCO International vs. Global Industrial Co |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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