Correlation Between MSC Industrial and Applied Industrial
Can any of the company-specific risk be diversified away by investing in both MSC Industrial and Applied 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 MSC Industrial and Applied Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSC Industrial Direct and Applied Industrial Technologies, you can compare the effects of market volatilities on MSC Industrial and Applied 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 MSC Industrial with a short position of Applied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSC Industrial and Applied Industrial.
Diversification Opportunities for MSC Industrial and Applied Industrial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MSC and Applied is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MSC Industrial Direct and Applied Industrial Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Industrial and MSC Industrial 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 MSC Industrial Direct are associated (or correlated) with Applied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Industrial has no effect on the direction of MSC Industrial i.e., MSC Industrial and Applied Industrial go up and down completely randomly.
Pair Corralation between MSC Industrial and Applied Industrial
Considering the 90-day investment horizon MSC Industrial Direct is expected to generate 0.72 times more return on investment than Applied Industrial. However, MSC Industrial Direct is 1.38 times less risky than Applied Industrial. It trades about 0.05 of its potential returns per unit of risk. Applied Industrial Technologies is currently generating about 0.0 per unit of risk. If you would invest 7,820 in MSC Industrial Direct on March 19, 2025 and sell it today you would earn a total of 388.00 from holding MSC Industrial Direct or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSC Industrial Direct vs. Applied Industrial Technologie
Performance |
| Timeline |
| MSC Industrial Direct |
| Applied Industrial |
MSC Industrial and Applied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSC Industrial and Applied Industrial
The main advantage of trading using opposite MSC Industrial and Applied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSC Industrial position performs unexpectedly, Applied 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 Applied Industrial will offset losses from the drop in Applied Industrial's long position.| MSC Industrial vs. DXP Enterprises | MSC Industrial vs. Core Main | MSC Industrial vs. WW Grainger | MSC Industrial vs. SiteOne Landscape Supply |
| Applied Industrial vs. Core Main | Applied Industrial vs. WW Grainger | Applied Industrial vs. DXP Enterprises | Applied 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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