Correlation Between BlueLinx Holdings and Fastenal

Can any of the company-specific risk be diversified away by investing in both BlueLinx Holdings and Fastenal 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 BlueLinx Holdings and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlueLinx Holdings and Fastenal Company, you can compare the effects of market volatilities on BlueLinx Holdings and Fastenal 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 BlueLinx Holdings with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueLinx Holdings and Fastenal.

Diversification Opportunities for BlueLinx Holdings and Fastenal

0.86

Correlation Coefficient

BlueLinx Holdings  Fastenal

Very poor diversification

The 3 months correlation between BlueLinx and Fastenal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and BlueLinx Holdings 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 BlueLinx Holdings are associated (or correlated) with Fastenal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastenal has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and Fastenal go up and down completely randomly.

Pair Corralation between BlueLinx Holdings and Fastenal

Considering the 90-day investment horizon BlueLinx Holdings is expected to under-perform the Fastenal. In addition to that, BlueLinx Holdings is 1.88 times more volatile than Fastenal Company. It trades about -0.43 of its total potential returns per unit of risk. Fastenal Company is currently generating about -0.6 per unit of volatility. If you would invest  8,410  in Fastenal Company on September 27, 2024 and sell it today you would lose (967.00) from holding Fastenal Company or give up 11.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BlueLinx Holdings  vs.  Fastenal Company

BlueLinx Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlueLinx Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, BlueLinx Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fastenal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fastenal is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BlueLinx Holdings and Fastenal

The main advantage of trading using opposite BlueLinx Holdings and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueLinx Holdings position performs unexpectedly, Fastenal 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 Fastenal will offset losses from the drop in Fastenal's long position.

The idea behind BlueLinx Holdings and Fastenal Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.