Correlation Between Barnes and BlueLinx Holdings
Can any of the company-specific risk be diversified away by investing in both Barnes and BlueLinx Holdings 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 Barnes and BlueLinx Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and BlueLinx Holdings, you can compare the effects of market volatilities on Barnes and BlueLinx Holdings 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 Barnes with a short position of BlueLinx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and BlueLinx Holdings.
Diversification Opportunities for Barnes and BlueLinx Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnes and BlueLinx is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and BlueLinx Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueLinx Holdings and Barnes 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 Barnes Group are associated (or correlated) with BlueLinx Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueLinx Holdings has no effect on the direction of Barnes i.e., Barnes and BlueLinx Holdings go up and down completely randomly.
Pair Corralation between Barnes and BlueLinx Holdings
Taking into account the 90-day investment horizon Barnes is expected to generate 2.46 times less return on investment than BlueLinx Holdings. But when comparing it to its historical volatility, Barnes Group is 1.12 times less risky than BlueLinx Holdings. It trades about 0.03 of its potential returns per unit of risk. BlueLinx Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,570 in BlueLinx Holdings on August 27, 2024 and sell it today you would earn a total of 6,183 from holding BlueLinx Holdings or generate 94.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. BlueLinx Holdings
Performance |
| Timeline |
| Barnes Group |
| BlueLinx Holdings |
Barnes and BlueLinx Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and BlueLinx Holdings
The main advantage of trading using opposite Barnes and BlueLinx Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, BlueLinx Holdings 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 BlueLinx Holdings will offset losses from the drop in BlueLinx Holdings' long position.| Barnes vs. Aquagold International | Barnes vs. Morningstar Unconstrained Allocation | Barnes vs. High Yield Municipal Fund | Barnes vs. Thrivent High Yield |
| BlueLinx Holdings vs. Global Industrial Co | BlueLinx Holdings vs. WESCO International | BlueLinx Holdings vs. MSC Industrial Direct |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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