Correlation Between Distribution Solutions and Core Main
Can any of the company-specific risk be diversified away by investing in both Distribution Solutions and Core Main 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 Distribution Solutions and Core Main into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribution Solutions Group and Core Main, you can compare the effects of market volatilities on Distribution Solutions and Core Main 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 Distribution Solutions with a short position of Core Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribution Solutions and Core Main.
Diversification Opportunities for Distribution Solutions and Core Main
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Distribution and Core is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Distribution Solutions Group and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main and Distribution Solutions 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 Distribution Solutions Group are associated (or correlated) with Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of Distribution Solutions i.e., Distribution Solutions and Core Main go up and down completely randomly.
Pair Corralation between Distribution Solutions and Core Main
Given the investment horizon of 90 days Distribution Solutions Group is expected to under-perform the Core Main. But the stock apears to be less risky and, when comparing its historical volatility, Distribution Solutions Group is 1.22 times less risky than Core Main. The stock trades about -0.02 of its potential returns per unit of risk. The Core Main is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,680 in Core Main on November 2, 2024 and sell it today you would earn a total of 1,023 from holding Core Main or generate 21.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Distribution Solutions Group vs. Core Main
Performance |
| Timeline |
| Distribution Solutions |
| Core Main |
Distribution Solutions and Core Main Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribution Solutions and Core Main
The main advantage of trading using opposite Distribution Solutions and Core Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribution Solutions position performs unexpectedly, Core Main 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 Core Main will offset losses from the drop in Core Main's long position.| Distribution Solutions vs. Global Industrial Co | Distribution Solutions vs. EVI Industries | Distribution Solutions vs. Core Main | Distribution Solutions vs. Watsco Inc |
| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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