Correlation Between SiteOne Landscape and Applied Industrial
Can any of the company-specific risk be diversified away by investing in both SiteOne Landscape and Applied 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 SiteOne Landscape and Applied Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SiteOne Landscape Supply and Applied Industrial Technologies, you can compare the effects of market volatilities on SiteOne Landscape and Applied 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 SiteOne Landscape with a short position of Applied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SiteOne Landscape and Applied Industrial.
Diversification Opportunities for SiteOne Landscape and Applied Industrial
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SiteOne and Applied is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SiteOne Landscape Supply and Applied Industrial Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Industrial and SiteOne Landscape 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 SiteOne Landscape Supply are associated (or correlated) with Applied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Industrial has no effect on the direction of SiteOne Landscape i.e., SiteOne Landscape and Applied Industrial go up and down completely randomly.
Pair Corralation between SiteOne Landscape and Applied Industrial
Given the investment horizon of 90 days SiteOne Landscape is expected to generate 2.4 times less return on investment than Applied Industrial. In addition to that, SiteOne Landscape is 1.35 times more volatile than Applied Industrial Technologies. It trades about 0.03 of its total potential returns per unit of risk. Applied Industrial Technologies is currently generating about 0.1 per unit of volatility. If you would invest 12,425 in Applied Industrial Technologies on August 27, 2024 and sell it today you would earn a total of 15,286 from holding Applied Industrial Technologies or generate 123.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SiteOne Landscape Supply vs. Applied Industrial Technologie
Performance |
| Timeline |
| SiteOne Landscape Supply |
| Applied Industrial |
SiteOne Landscape and Applied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SiteOne Landscape and Applied Industrial
The main advantage of trading using opposite SiteOne Landscape and Applied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiteOne Landscape position performs unexpectedly, Applied 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 Applied Industrial will offset losses from the drop in Applied Industrial's long position.| SiteOne Landscape vs. DXP Enterprises | SiteOne Landscape vs. Applied Industrial Technologies | SiteOne Landscape vs. Ferguson Plc | SiteOne Landscape vs. Global Industrial Co |
| Applied Industrial vs. Global Industrial Co | Applied Industrial vs. BlueLinx Holdings | Applied Industrial vs. WESCO International | Applied Industrial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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