Correlation Between MSC Industrial and WW Grainger

Can any of the company-specific risk be diversified away by investing in both MSC Industrial 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 MSC Industrial and WW Grainger 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 WW Grainger, you can compare the effects of market volatilities on MSC Industrial 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 MSC Industrial with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSC Industrial and WW Grainger.

Diversification Opportunities for MSC Industrial and WW Grainger

0.23

Correlation Coefficient

MSC Industrial  WW Grainger

Modest diversification

The 3 months correlation between MSC and GWW is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MSC Industrial Direct and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 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 MSC Industrial i.e., MSC Industrial and WW Grainger go up and down completely randomly.

Pair Corralation between MSC Industrial and WW Grainger

Considering the 90-day investment horizon MSC Industrial Direct is expected to generate 0.85 times more return on investment than WW Grainger. However, MSC Industrial Direct is 1.18 times less risky than WW Grainger. It trades about 0.09 of its potential returns per unit of risk. WW Grainger is currently generating about -0.06 per unit of risk. If you would invest  8,422  in MSC Industrial Direct on June 29, 2025 and sell it today you would earn a total of  671.00  from holding MSC Industrial Direct or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MSC Industrial Direct  vs.  WW Grainger

MSC Industrial Direct

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in MSC Industrial Direct are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, MSC Industrial may actually be approaching a critical reversion point that can send shares even higher in October 2025.

WW Grainger

Risk-Adjusted Performance

Weakest

Over the last 90 days WW Grainger has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with MSC Industrial and WW Grainger

The main advantage of trading using opposite MSC Industrial and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSC Industrial 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.

The idea behind MSC Industrial Direct and WW Grainger pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.