Correlation Between WW Grainger and MSC Industrial
Can any of the company-specific risk be diversified away by investing in both WW Grainger and MSC 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 WW Grainger and MSC Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WW Grainger and MSC Industrial Direct, you can compare the effects of market volatilities on WW Grainger and MSC 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 WW Grainger with a short position of MSC Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WW Grainger and MSC Industrial.
Diversification Opportunities for WW Grainger and MSC Industrial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GWW and MSC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WW Grainger and MSC Industrial Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSC Industrial Direct and WW Grainger 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 WW Grainger are associated (or correlated) with MSC Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSC Industrial Direct has no effect on the direction of WW Grainger i.e., WW Grainger and MSC Industrial go up and down completely randomly.
Pair Corralation between WW Grainger and MSC Industrial
Considering the 90-day investment horizon WW Grainger is expected to under-perform the MSC Industrial. In addition to that, WW Grainger is 1.66 times more volatile than MSC Industrial Direct. It trades about -0.25 of its total potential returns per unit of risk. MSC Industrial Direct is currently generating about -0.02 per unit of volatility. If you would invest 8,178 in MSC Industrial Direct on November 18, 2024 and sell it today you would lose (33.00) from holding MSC Industrial Direct or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WW Grainger vs. MSC Industrial Direct
Performance |
| Timeline |
| WW Grainger |
| MSC Industrial Direct |
WW Grainger and MSC Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WW Grainger and MSC Industrial
The main advantage of trading using opposite WW Grainger and MSC Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WW Grainger position performs unexpectedly, MSC 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 MSC Industrial will offset losses from the drop in MSC Industrial's long position.| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial Technologies |
| MSC Industrial vs. DXP Enterprises | MSC Industrial vs. Core Main | MSC Industrial vs. WW Grainger | MSC Industrial vs. SiteOne Landscape Supply |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |