Correlation Between Indutrade and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Indutrade 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 Indutrade and WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and WW Grainger, you can compare the effects of market volatilities on Indutrade 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 Indutrade with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and WW Grainger.
Diversification Opportunities for Indutrade and WW Grainger
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indutrade and GWW is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger and Indutrade 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 Indutrade AB 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 Indutrade i.e., Indutrade and WW Grainger go up and down completely randomly.
Pair Corralation between Indutrade and WW Grainger
Assuming the 90 days horizon Indutrade is expected to generate 1.35 times less return on investment than WW Grainger. In addition to that, Indutrade is 1.25 times more volatile than WW Grainger. It trades about 0.06 of its total potential returns per unit of risk. WW Grainger is currently generating about 0.1 per unit of volatility. If you would invest 50,762 in WW Grainger on September 26, 2024 and sell it today you would earn a total of 52,688 from holding WW Grainger or generate 103.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Indutrade AB vs. WW Grainger
Performance |
Timeline |
Indutrade AB |
WW Grainger |
Indutrade and WW Grainger Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indutrade and WW Grainger
The main advantage of trading using opposite Indutrade and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade 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.Indutrade vs. WW Grainger | Indutrade vs. Fastenal Company | Indutrade vs. Watsco Inc | Indutrade vs. WATSCO INC B |
WW Grainger vs. Fastenal Company | WW Grainger vs. Watsco Inc | WW Grainger vs. WATSCO INC B | WW Grainger vs. RATIONAL UNADR 1 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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