Correlation Between Global Industrial and Ferguson Plc
Can any of the company-specific risk be diversified away by investing in both Global Industrial and Ferguson Plc 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 Global Industrial and Ferguson Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Industrial Co and Ferguson Plc, you can compare the effects of market volatilities on Global Industrial and Ferguson Plc 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 Global Industrial with a short position of Ferguson Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Industrial and Ferguson Plc.
Diversification Opportunities for Global Industrial and Ferguson Plc
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Ferguson is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global Industrial Co and Ferguson Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferguson Plc and Global Industrial 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 Global Industrial Co are associated (or correlated) with Ferguson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferguson Plc has no effect on the direction of Global Industrial i.e., Global Industrial and Ferguson Plc go up and down completely randomly.
Pair Corralation between Global Industrial and Ferguson Plc
Considering the 90-day investment horizon Global Industrial Co is expected to generate 0.93 times more return on investment than Ferguson Plc. However, Global Industrial Co is 1.07 times less risky than Ferguson Plc. It trades about -0.02 of its potential returns per unit of risk. Ferguson Plc is currently generating about -0.05 per unit of risk. If you would invest 2,629 in Global Industrial Co on November 2, 2024 and sell it today you would lose (86.00) from holding Global Industrial Co or give up 3.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Industrial Co vs. Ferguson Plc
Performance |
| Timeline |
| Global Industrial |
| Ferguson Plc |
Global Industrial and Ferguson Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Industrial and Ferguson Plc
The main advantage of trading using opposite Global Industrial and Ferguson Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Industrial position performs unexpectedly, Ferguson Plc 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 Ferguson Plc will offset losses from the drop in Ferguson Plc's long position.| Global Industrial vs. Distribution Solutions Group | Global Industrial vs. Core Main | Global Industrial vs. Applied Industrial Technologies | Global Industrial vs. BlueLinx Holdings |
| Ferguson Plc vs. DXP Enterprises | Ferguson Plc vs. Applied Industrial Technologies | Ferguson Plc vs. Global Industrial Co | Ferguson Plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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