Correlation Between Ferguson Plc and Global Industrial
Can any of the company-specific risk be diversified away by investing in both Ferguson Plc 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 Ferguson Plc and Global Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferguson Plc and Global Industrial Co, you can compare the effects of market volatilities on Ferguson Plc 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 Ferguson Plc with a short position of Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferguson Plc and Global Industrial.
Diversification Opportunities for Ferguson Plc and Global Industrial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ferguson and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ferguson Plc and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial and Ferguson Plc 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 Ferguson Plc 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 Ferguson Plc i.e., Ferguson Plc and Global Industrial go up and down completely randomly.
Pair Corralation between Ferguson Plc and Global Industrial
Given the investment horizon of 90 days Ferguson Plc is expected to generate 1.26 times more return on investment than Global Industrial. However, Ferguson Plc is 1.26 times more volatile than Global Industrial Co. It trades about 0.11 of its potential returns per unit of risk. Global Industrial Co is currently generating about -0.09 per unit of risk. If you would invest 17,755 in Ferguson Plc on November 18, 2024 and sell it today you would earn a total of 670.00 from holding Ferguson Plc or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferguson Plc vs. Global Industrial Co
Performance |
| Timeline |
| Ferguson Plc |
| Global Industrial |
Ferguson Plc and Global Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferguson Plc and Global Industrial
The main advantage of trading using opposite Ferguson Plc and Global Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferguson Plc 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.| Ferguson Plc vs. DXP Enterprises | Ferguson Plc vs. Applied Industrial Technologies | Ferguson Plc vs. Global Industrial Co | Ferguson Plc vs. MSC Industrial Direct |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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