Correlation Between Transcat and BlueLinx Holdings

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

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

Diversification Opportunities for Transcat and BlueLinx Holdings

0.67

Correlation Coefficient

Transcat  BlueLinx Holdings

Poor diversification

The 3 months correlation between Transcat and BlueLinx is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Transcat and BlueLinx Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueLinx Holdings and Transcat 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 Transcat 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 Transcat i.e., Transcat and BlueLinx Holdings go up and down completely randomly.

Pair Corralation between Transcat and BlueLinx Holdings

Given the investment horizon of 90 days Transcat is expected to under-perform the BlueLinx Holdings. In addition to that, Transcat is 1.2 times more volatile than BlueLinx Holdings. It trades about -0.16 of its total potential returns per unit of risk. BlueLinx Holdings is currently generating about -0.16 per unit of volatility. If you would invest  10,245  in BlueLinx Holdings on December 30, 2024 and sell it today you would lose (2,584) from holding BlueLinx Holdings or give up 25.22% of portfolio value over 90 days.

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

Transcat  vs.  BlueLinx Holdings

Transcat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcat 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Transcat and BlueLinx Holdings

The main advantage of trading using opposite Transcat and BlueLinx Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcat 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.

The idea behind Transcat and BlueLinx Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.