Correlation Between TRADEGATE and WW Grainger
Can any of the company-specific risk be diversified away by investing in both TRADEGATE 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 TRADEGATE and WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and WW Grainger, you can compare the effects of market volatilities on TRADEGATE 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 TRADEGATE with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and WW Grainger.
Diversification Opportunities for TRADEGATE and WW Grainger
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TRADEGATE and GWW is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger and TRADEGATE 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 TRADEGATE 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 TRADEGATE i.e., TRADEGATE and WW Grainger go up and down completely randomly.
Pair Corralation between TRADEGATE and WW Grainger
Assuming the 90 days trading horizon TRADEGATE is expected to generate 2963.0 times less return on investment than WW Grainger. But when comparing it to its historical volatility, TRADEGATE is 7.03 times less risky than WW Grainger. It trades about 0.0 of its potential returns per unit of risk. WW Grainger is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 101,650 in WW Grainger on November 5, 2024 and sell it today you would earn a total of 6,350 from holding WW Grainger or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRADEGATE vs. WW Grainger
Performance |
| Timeline |
| TRADEGATE |
| WW Grainger |
TRADEGATE and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and WW Grainger
The main advantage of trading using opposite TRADEGATE and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE 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.| TRADEGATE vs. Check Point Software | TRADEGATE vs. Harmony Gold Mining | TRADEGATE vs. DISTRICT METALS | TRADEGATE vs. Western Copper and |
| WW Grainger vs. Fast Retailing Co | WW Grainger vs. CHRYSALIS INVESTMENTS LTD | WW Grainger vs. SIDETRADE EO 1 | WW Grainger vs. New Residential Investment |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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