Correlation Between Canadian Pacific and BlueLinx Holdings
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific 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 Canadian Pacific and BlueLinx Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Pacific Railway and BlueLinx Holdings, you can compare the effects of market volatilities on Canadian Pacific 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 Canadian Pacific with a short position of BlueLinx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and BlueLinx Holdings.
Diversification Opportunities for Canadian Pacific and BlueLinx Holdings
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canadian and BlueLinx is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and BlueLinx Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueLinx Holdings and Canadian Pacific 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 Canadian Pacific Railway 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 Canadian Pacific i.e., Canadian Pacific and BlueLinx Holdings go up and down completely randomly.
Pair Corralation between Canadian Pacific and BlueLinx Holdings
Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to under-perform the BlueLinx Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Pacific Railway is 2.51 times less risky than BlueLinx Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The BlueLinx Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,337 in BlueLinx Holdings on August 24, 2024 and sell it today you would earn a total of 1,999 from holding BlueLinx Holdings or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Canadian Pacific Railway vs. BlueLinx Holdings
Performance |
| Timeline |
| Canadian Pacific Railway |
| BlueLinx Holdings |
Canadian Pacific and BlueLinx Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and BlueLinx Holdings
The main advantage of trading using opposite Canadian Pacific and BlueLinx Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific 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.| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. CSX Corporation | Canadian Pacific vs. Norfolk Southern | Canadian Pacific vs. Westinghouse Air Brake |
| BlueLinx Holdings vs. DXP Enterprises | BlueLinx Holdings vs. Distribution Solutions Group | BlueLinx Holdings vs. Core Main | BlueLinx Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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