Correlation Between BlueLinx Holdings and WESCO International

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

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

Diversification Opportunities for BlueLinx Holdings and WESCO International

-0.6

Correlation Coefficient

BlueLinx Holdings  WESCO International

Excellent diversification

The 3 months correlation between BlueLinx and WESCO is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International 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 WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and WESCO International go up and down completely randomly.

Pair Corralation between BlueLinx Holdings and WESCO International

Considering the 90-day investment horizon BlueLinx Holdings is expected to under-perform the WESCO International. In addition to that, BlueLinx Holdings is 17.21 times more volatile than WESCO International. It trades about -0.25 of its total potential returns per unit of risk. WESCO International is currently generating about 0.19 per unit of volatility. If you would invest  2,541  in WESCO International on November 28, 2024 and sell it today you would earn a total of  43.00  from holding WESCO International or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

BlueLinx Holdings  vs.  WESCO International

BlueLinx Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlueLinx Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

WESCO International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WESCO International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, WESCO International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlueLinx Holdings and WESCO International

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

The idea behind BlueLinx Holdings and WESCO International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.