Correlation Between DXP Enterprises and BlueLinx Holdings
Can any of the company-specific risk be diversified away by investing in both DXP Enterprises 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 DXP Enterprises and BlueLinx Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXP Enterprises and BlueLinx Holdings, you can compare the effects of market volatilities on DXP Enterprises 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 DXP Enterprises with a short position of BlueLinx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXP Enterprises and BlueLinx Holdings.
Diversification Opportunities for DXP Enterprises and BlueLinx Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DXP and BlueLinx is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding DXP Enterprises and BlueLinx Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueLinx Holdings and DXP Enterprises 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 DXP Enterprises 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 DXP Enterprises i.e., DXP Enterprises and BlueLinx Holdings go up and down completely randomly.
Pair Corralation between DXP Enterprises and BlueLinx Holdings
Given the investment horizon of 90 days DXP Enterprises is expected to generate 1.23 times more return on investment than BlueLinx Holdings. However, DXP Enterprises is 1.23 times more volatile than BlueLinx Holdings. It trades about 0.22 of its potential returns per unit of risk. BlueLinx Holdings is currently generating about 0.07 per unit of risk. If you would invest 5,360 in DXP Enterprises on November 2, 2024 and sell it today you would earn a total of 4,946 from holding DXP Enterprises or generate 92.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXP Enterprises vs. BlueLinx Holdings
Performance |
| Timeline |
| DXP Enterprises |
| BlueLinx Holdings |
DXP Enterprises and BlueLinx Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXP Enterprises and BlueLinx Holdings
The main advantage of trading using opposite DXP Enterprises and BlueLinx Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXP Enterprises 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.| DXP Enterprises vs. Global Industrial Co | DXP Enterprises vs. EVI Industries | DXP Enterprises vs. Core Main | DXP Enterprises vs. Watsco Inc |
| BlueLinx Holdings vs. DXP Enterprises | BlueLinx Holdings vs. Distribution Solutions Group | BlueLinx Holdings vs. Core Main | BlueLinx Holdings vs. WESCO International |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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