Correlation Between BlueLinx Holdings and WW Grainger
Can any of the company-specific risk be diversified away by investing in both BlueLinx Holdings and WW Grainger 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 WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueLinx Holdings and WW Grainger, you can compare the effects of market volatilities on BlueLinx Holdings and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueLinx Holdings and WW Grainger.
Diversification Opportunities for BlueLinx Holdings and WW Grainger
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BlueLinx and GWW is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and WW Grainger go up and down completely randomly.
Pair Corralation between BlueLinx Holdings and WW Grainger
Considering the 90-day investment horizon BlueLinx Holdings is expected to generate 1.9 times more return on investment than WW Grainger. However, BlueLinx Holdings is 1.9 times more volatile than WW Grainger. It trades about 0.07 of its potential returns per unit of risk. WW Grainger is currently generating about 0.12 per unit of risk. If you would invest 9,565 in BlueLinx Holdings on November 2, 2024 and sell it today you would earn a total of 1,661 from holding BlueLinx Holdings or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueLinx Holdings vs. WW Grainger
Performance |
| Timeline |
| BlueLinx Holdings |
| WW Grainger |
BlueLinx Holdings and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueLinx Holdings and WW Grainger
The main advantage of trading using opposite BlueLinx Holdings and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueLinx Holdings position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| BlueLinx Holdings vs. DXP Enterprises | BlueLinx Holdings vs. Distribution Solutions Group | BlueLinx Holdings vs. Core Main | BlueLinx Holdings vs. WESCO International |
| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial Technologies |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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