Correlation Between MSC Industrial and Gates Industrial

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

Diversification Opportunities for MSC Industrial and Gates Industrial

0.52

Correlation Coefficient

MSC Industrial  Gates Industrial

Very weak diversification

The 3 months correlation between MSC and Gates is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MSC Industrial Direct and Gates Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gates 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 Gates Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gates Industrial has no effect on the direction of MSC Industrial i.e., MSC Industrial and Gates Industrial go up and down completely randomly.

Pair Corralation between MSC Industrial and Gates Industrial

Considering the 90-day investment horizon MSC Industrial Direct is expected to generate 0.66 times more return on investment than Gates Industrial. However, MSC Industrial Direct is 1.52 times less risky than Gates Industrial. It trades about -0.01 of its potential returns per unit of risk. Gates Industrial is currently generating about -0.08 per unit of risk. If you would invest  9,007  in MSC Industrial Direct on August 28, 2025 and sell it today you would lose (166.00) from holding MSC Industrial Direct or give up 1.84% of portfolio value over 90 days.

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

MSC Industrial Direct  vs.  Gates Industrial

MSC Industrial Direct

Risk-Adjusted Performance

Weakest

Over the last 90 days MSC Industrial Direct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MSC Industrial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Gates Industrial

Risk-Adjusted Performance

Weakest

Over the last 90 days Gates Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MSC Industrial and Gates Industrial

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

The idea behind MSC Industrial Direct and Gates Industrial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.