Correlation Between BlueLinx Holdings and WW Grainger

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

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

Diversification Opportunities for BlueLinx Holdings and WW Grainger

0.89

Correlation Coefficient

BlueLinx Holdings  WW Grainger

Very poor diversification

The 3 months correlation between BlueLinx and GWW is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and WW Grainger go up and down completely randomly.

Pair Corralation between BlueLinx Holdings and WW Grainger

Considering the 90-day investment horizon BlueLinx Holdings is expected to generate 1.36 times less return on investment than WW Grainger. In addition to that, BlueLinx Holdings is 1.74 times more volatile than WW Grainger. It trades about 0.04 of its total potential returns per unit of risk. WW Grainger is currently generating about 0.1 per unit of volatility. If you would invest  44,517  in WW Grainger on March 21, 2024 and sell it today you would earn a total of  47,932  from holding WW Grainger or generate 107.67% return on investment over 90 days.

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

BlueLinx Holdings  vs.  WW Grainger

BlueLinx Holdings

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

WW Grainger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WW Grainger has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with BlueLinx Holdings and WW Grainger

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

The idea behind BlueLinx Holdings and WW Grainger 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.