Correlation Between Crane and BlueLinx Holdings
Can any of the company-specific risk be diversified away by investing in both Crane 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 Crane and BlueLinx Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and BlueLinx Holdings, you can compare the effects of market volatilities on Crane 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 Crane with a short position of BlueLinx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and BlueLinx Holdings.
Diversification Opportunities for Crane and BlueLinx Holdings
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crane and BlueLinx is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and BlueLinx Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueLinx Holdings and Crane 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 Crane Company 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 Crane i.e., Crane and BlueLinx Holdings go up and down completely randomly.
Pair Corralation between Crane and BlueLinx Holdings
Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.67 times more return on investment than BlueLinx Holdings. However, Crane Company is 1.5 times less risky than BlueLinx Holdings. It trades about 0.45 of its potential returns per unit of risk. BlueLinx Holdings is currently generating about 0.29 per unit of risk. If you would invest 15,239 in Crane Company on August 27, 2024 and sell it today you would earn a total of 3,197 from holding Crane Company or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. BlueLinx Holdings
Performance |
| Timeline |
| Crane Company |
| BlueLinx Holdings |
Crane and BlueLinx Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and BlueLinx Holdings
The main advantage of trading using opposite Crane and BlueLinx Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane 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.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| BlueLinx Holdings vs. Global Industrial Co | BlueLinx Holdings vs. WESCO International | BlueLinx Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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