Correlation Between BlueLinx Holdings and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both BlueLinx Holdings and Beacon Roofing 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 BlueLinx Holdings and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueLinx Holdings and Beacon Roofing Supply, you can compare the effects of market volatilities on BlueLinx Holdings and Beacon Roofing 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 BlueLinx Holdings with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueLinx Holdings and Beacon Roofing.
Diversification Opportunities for BlueLinx Holdings and Beacon Roofing
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BlueLinx and Beacon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and BlueLinx Holdings 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 BlueLinx Holdings are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and Beacon Roofing go up and down completely randomly.
Pair Corralation between BlueLinx Holdings and Beacon Roofing
Considering the 90-day investment horizon BlueLinx Holdings is expected to generate 1.24 times more return on investment than Beacon Roofing. However, BlueLinx Holdings is 1.24 times more volatile than Beacon Roofing Supply. It trades about 0.07 of its potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.07 per unit of risk. If you would invest 8,639 in BlueLinx Holdings on August 24, 2024 and sell it today you would earn a total of 3,697 from holding BlueLinx Holdings or generate 42.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueLinx Holdings vs. Beacon Roofing Supply
Performance |
| Timeline |
| BlueLinx Holdings |
| Beacon Roofing Supply |
BlueLinx Holdings and Beacon Roofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueLinx Holdings and Beacon Roofing
The main advantage of trading using opposite BlueLinx Holdings and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueLinx Holdings position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.| BlueLinx Holdings vs. DXP Enterprises | BlueLinx Holdings vs. Distribution Solutions Group | BlueLinx Holdings vs. Core Main | BlueLinx Holdings vs. Applied Industrial Technologies |
| Beacon Roofing vs. Quanex Building Products | Beacon Roofing vs. Gibraltar Industries | Beacon Roofing vs. Armstrong World Industries | Beacon Roofing vs. Janus International Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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