Correlation Between WESCO International and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both WESCO International and Beacon Roofing 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 WESCO International and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESCO International and Beacon Roofing Supply, you can compare the effects of market volatilities on WESCO International and Beacon Roofing 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 WESCO International with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESCO International and Beacon Roofing.
Diversification Opportunities for WESCO International and Beacon Roofing
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WESCO and Beacon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and WESCO International 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 WESCO International are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of WESCO International i.e., WESCO International and Beacon Roofing go up and down completely randomly.
Pair Corralation between WESCO International and Beacon Roofing
Considering the 90-day investment horizon WESCO International is expected to under-perform the Beacon Roofing. In addition to that, WESCO International is 7.74 times more volatile than Beacon Roofing Supply. It trades about -0.07 of its total potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.2 per unit of volatility. If you would invest 11,990 in Beacon Roofing Supply on January 14, 2025 and sell it today you would earn a total of 325.00 from holding Beacon Roofing Supply or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESCO International vs. Beacon Roofing Supply
Performance |
| Timeline |
| WESCO International |
| Beacon Roofing Supply |
WESCO International and Beacon Roofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESCO International and Beacon Roofing
The main advantage of trading using opposite WESCO International and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.| WESCO International vs. DXP Enterprises | WESCO International vs. Applied Industrial Technologies | WESCO International vs. Ferguson Plc | WESCO International vs. Global Industrial Co |
| Beacon Roofing vs. Quanex Building Products | Beacon Roofing vs. Gibraltar Industries | Beacon Roofing vs. Armstrong World Industries | Beacon Roofing vs. Janus International Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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