Correlation Between Ferguson Plc and Distribution Solutions
Can any of the company-specific risk be diversified away by investing in both Ferguson Plc and Distribution Solutions 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 Ferguson Plc and Distribution Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferguson Plc and Distribution Solutions Group, you can compare the effects of market volatilities on Ferguson Plc and Distribution Solutions 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 Ferguson Plc with a short position of Distribution Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferguson Plc and Distribution Solutions.
Diversification Opportunities for Ferguson Plc and Distribution Solutions
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ferguson and Distribution is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ferguson Plc and Distribution Solutions Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribution Solutions and Ferguson Plc 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 Ferguson Plc are associated (or correlated) with Distribution Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribution Solutions has no effect on the direction of Ferguson Plc i.e., Ferguson Plc and Distribution Solutions go up and down completely randomly.
Pair Corralation between Ferguson Plc and Distribution Solutions
Given the investment horizon of 90 days Ferguson Plc is expected to generate 0.87 times more return on investment than Distribution Solutions. However, Ferguson Plc is 1.16 times less risky than Distribution Solutions. It trades about 0.06 of its potential returns per unit of risk. Distribution Solutions Group is currently generating about 0.0 per unit of risk. If you would invest 18,262 in Ferguson Plc on June 6, 2025 and sell it today you would earn a total of 5,338 from holding Ferguson Plc or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferguson Plc vs. Distribution Solutions Group
Performance |
| Timeline |
| Ferguson Plc |
| Distribution Solutions |
Ferguson Plc and Distribution Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferguson Plc and Distribution Solutions
The main advantage of trading using opposite Ferguson Plc and Distribution Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferguson Plc position performs unexpectedly, Distribution Solutions 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 Distribution Solutions will offset losses from the drop in Distribution Solutions' long position.| Ferguson Plc vs. DXP Enterprises | Ferguson Plc vs. Applied Industrial Technologies | Ferguson Plc vs. Global Industrial Co | Ferguson Plc vs. MSC Industrial Direct |
| Distribution Solutions vs. Global Industrial Co | Distribution Solutions vs. EVI Industries | Distribution Solutions vs. Core Main | Distribution Solutions vs. Watsco Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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