Correlation Between BlueLinx Holdings and Distribution Solutions
Can any of the company-specific risk be diversified away by investing in both BlueLinx Holdings and Distribution Solutions 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 Distribution Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueLinx Holdings and Distribution Solutions Group, you can compare the effects of market volatilities on BlueLinx Holdings and Distribution Solutions 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 Distribution Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueLinx Holdings and Distribution Solutions.
Diversification Opportunities for BlueLinx Holdings and Distribution Solutions
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BlueLinx and Distribution is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and Distribution Solutions Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribution Solutions 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 Distribution Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribution Solutions has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and Distribution Solutions go up and down completely randomly.
Pair Corralation between BlueLinx Holdings and Distribution Solutions
Considering the 90-day investment horizon BlueLinx Holdings is expected to generate 0.74 times more return on investment than Distribution Solutions. However, BlueLinx Holdings is 1.35 times less risky than Distribution Solutions. It trades about 0.29 of its potential returns per unit of risk. Distribution Solutions Group is currently generating about -0.04 per unit of risk. If you would invest 10,698 in BlueLinx Holdings on August 27, 2024 and sell it today you would earn a total of 2,055 from holding BlueLinx Holdings or generate 19.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueLinx Holdings vs. Distribution Solutions Group
Performance |
| Timeline |
| BlueLinx Holdings |
| Distribution Solutions |
BlueLinx Holdings and Distribution Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueLinx Holdings and Distribution Solutions
The main advantage of trading using opposite BlueLinx Holdings and Distribution Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueLinx Holdings position performs unexpectedly, Distribution Solutions 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 Distribution Solutions will offset losses from the drop in Distribution Solutions' long position.| BlueLinx Holdings vs. Global Industrial Co | BlueLinx Holdings vs. WESCO International | BlueLinx Holdings vs. MSC Industrial Direct |
| Distribution Solutions vs. Global Industrial Co | Distribution Solutions vs. WESCO International | Distribution Solutions 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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