Correlation Between WESCO International and MSC Industrial
Can any of the company-specific risk be diversified away by investing in both WESCO International 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 WESCO International and MSC Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESCO International and MSC Industrial Direct, you can compare the effects of market volatilities on WESCO International 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 WESCO International with a short position of MSC Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESCO International and MSC Industrial.
Diversification Opportunities for WESCO International and MSC Industrial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WESCO and MSC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International 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 WESCO International 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 WESCO International 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 WESCO International i.e., WESCO International and MSC Industrial go up and down completely randomly.
Pair Corralation between WESCO International and MSC Industrial
Assuming the 90 days trading horizon WESCO International is expected to generate 10.74 times less return on investment than MSC Industrial. But when comparing it to its historical volatility, WESCO International is 17.99 times less risky than MSC Industrial. It trades about 0.15 of its potential returns per unit of risk. MSC Industrial Direct is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,164 in MSC Industrial Direct on August 30, 2024 and sell it today you would earn a total of 360.00 from holding MSC Industrial Direct or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESCO International vs. MSC Industrial Direct
Performance |
| Timeline |
| WESCO International |
| MSC Industrial Direct |
WESCO International and MSC Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESCO International and MSC Industrial
The main advantage of trading using opposite WESCO International and MSC Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International 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.| WESCO International vs. SiriusPoint | WESCO International vs. Argo Group International | WESCO International vs. Global Ship Lease | WESCO International vs. Compass Diversified |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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