Correlation Between Applied Industrial and CAE

Can any of the company-specific risk be diversified away by investing in both Applied Industrial and CAE 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 Applied Industrial and CAE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Industrial Technologies and CAE Inc, you can compare the effects of market volatilities on Applied Industrial and CAE 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 Applied Industrial with a short position of CAE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Industrial and CAE.

Diversification Opportunities for Applied Industrial and CAE

0.06

Correlation Coefficient

Applied Industrial  CAE

Significant diversification

The 3 months correlation between Applied and CAE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Applied Industrial Technologie and CAE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAE Inc and Applied 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 Applied Industrial Technologies are associated (or correlated) with CAE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAE Inc has no effect on the direction of Applied Industrial i.e., Applied Industrial and CAE go up and down completely randomly.

Pair Corralation between Applied Industrial and CAE

Considering the 90-day investment horizon Applied Industrial Technologies is expected to generate 0.97 times more return on investment than CAE. However, Applied Industrial Technologies is 1.03 times less risky than CAE. It trades about 0.06 of its potential returns per unit of risk. CAE Inc is currently generating about 0.04 per unit of risk. If you would invest  15,299  in Applied Industrial Technologies on July 23, 2025 and sell it today you would earn a total of  9,658  from holding Applied Industrial Technologies or generate 63.13% return on investment over 90 days.

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

Applied Industrial Technologie  vs.  CAE Inc

Applied Industrial

Risk-Adjusted Performance

Weakest

Over the last 90 days Applied Industrial Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Applied Industrial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

CAE Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days CAE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CAE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Applied Industrial and CAE

The main advantage of trading using opposite Applied Industrial and CAE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Industrial position performs unexpectedly, CAE 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 CAE will offset losses from the drop in CAE's long position.

The idea behind Applied Industrial Technologies and CAE Inc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.