Correlation Between BlueLinx Holdings and Pool
Can any of the company-specific risk be diversified away by investing in both BlueLinx Holdings and Pool 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 Pool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueLinx Holdings and Pool Corporation, you can compare the effects of market volatilities on BlueLinx Holdings and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueLinx Holdings and Pool.
Diversification Opportunities for BlueLinx Holdings and Pool
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlueLinx and Pool is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and Pool go up and down completely randomly.
Pair Corralation between BlueLinx Holdings and Pool
Considering the 90-day investment horizon BlueLinx Holdings is expected to generate 1.53 times more return on investment than Pool. However, BlueLinx Holdings is 1.53 times more volatile than Pool Corporation. It trades about 0.28 of its potential returns per unit of risk. Pool Corporation is currently generating about 0.1 per unit of risk. If you would invest 10,343 in BlueLinx Holdings on August 30, 2024 and sell it today you would earn a total of 2,170 from holding BlueLinx Holdings or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueLinx Holdings vs. Pool Corp.
Performance |
| Timeline |
| BlueLinx Holdings |
| Pool |
BlueLinx Holdings and Pool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueLinx Holdings and Pool
The main advantage of trading using opposite BlueLinx Holdings and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueLinx Holdings position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool's long position.| BlueLinx Holdings vs. DXP Enterprises | BlueLinx Holdings vs. Watsco Inc | BlueLinx Holdings vs. Distribution Solutions Group | BlueLinx Holdings vs. SiteOne Landscape Supply |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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