Correlation Between MSC Industrial and Global Industrial
Can any of the company-specific risk be diversified away by investing in both MSC Industrial 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 MSC Industrial and Global Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSC Industrial Direct and Global Industrial Co, you can compare the effects of market volatilities on MSC Industrial 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 MSC Industrial with a short position of Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSC Industrial and Global Industrial.
Diversification Opportunities for MSC Industrial and Global Industrial
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MSC and Global is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MSC Industrial Direct and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial and MSC 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 MSC Industrial Direct 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 MSC Industrial i.e., MSC Industrial and Global Industrial go up and down completely randomly.
Pair Corralation between MSC Industrial and Global Industrial
Considering the 90-day investment horizon MSC Industrial Direct is expected to generate 1.11 times more return on investment than Global Industrial. However, MSC Industrial is 1.11 times more volatile than Global Industrial Co. It trades about 0.19 of its potential returns per unit of risk. Global Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 7,622 in MSC Industrial Direct on October 20, 2024 and sell it today you would earn a total of 556.00 from holding MSC Industrial Direct or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSC Industrial Direct vs. Global Industrial Co
Performance |
| Timeline |
| MSC Industrial Direct |
| Global Industrial |
MSC Industrial and Global Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSC Industrial and Global Industrial
The main advantage of trading using opposite MSC Industrial and Global Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSC Industrial 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.| MSC Industrial vs. DXP Enterprises | MSC Industrial vs. Core Main | MSC Industrial vs. WW Grainger | MSC Industrial vs. SiteOne Landscape Supply |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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