Correlation Between Transcat and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Transcat 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 Transcat and WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcat and WW Grainger, you can compare the effects of market volatilities on Transcat 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 Transcat with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcat and WW Grainger.
Diversification Opportunities for Transcat and WW Grainger
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Transcat and GWW is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Transcat and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger and Transcat 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 Transcat 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 Transcat i.e., Transcat and WW Grainger go up and down completely randomly.
Pair Corralation between Transcat and WW Grainger
Given the investment horizon of 90 days Transcat is expected to under-perform the WW Grainger. In addition to that, Transcat is 2.68 times more volatile than WW Grainger. It trades about -0.04 of its total potential returns per unit of risk. WW Grainger is currently generating about 0.28 per unit of volatility. If you would invest 110,223 in WW Grainger on August 27, 2024 and sell it today you would earn a total of 11,353 from holding WW Grainger or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcat vs. WW Grainger
Performance |
| Timeline |
| Transcat |
| WW Grainger |
Transcat and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcat and WW Grainger
The main advantage of trading using opposite Transcat and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcat 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.| Transcat vs. BlueLinx Holdings | Transcat vs. SiteOne Landscape Supply | Transcat vs. DXP Enterprises | Transcat vs. Core Main |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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