Correlation Between Global Industrial and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Global Industrial 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 Global Industrial and WW Grainger 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 WW Grainger, you can compare the effects of market volatilities on Global Industrial 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 Global Industrial with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Industrial and WW Grainger.
Diversification Opportunities for Global Industrial and WW Grainger
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and GWW is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Global Industrial Co and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 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 Global Industrial i.e., Global Industrial and WW Grainger go up and down completely randomly.
Pair Corralation between Global Industrial and WW Grainger
Considering the 90-day investment horizon Global Industrial is expected to generate 2.88 times less return on investment than WW Grainger. In addition to that, Global Industrial is 1.44 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 0.11 per unit of volatility. If you would invest 56,981 in WW Grainger on August 27, 2024 and sell it today you would earn a total of 63,684 from holding WW Grainger or generate 111.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Industrial Co vs. WW Grainger
Performance |
| Timeline |
| Global Industrial |
| WW Grainger |
Global Industrial and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Industrial and WW Grainger
The main advantage of trading using opposite Global Industrial and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Industrial 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.| Global Industrial vs. Distribution Solutions Group | Global Industrial vs. Core Main | Global Industrial vs. Applied Industrial Technologies | Global Industrial vs. BlueLinx Holdings |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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