Correlation Between BlueLinx Holdings and Daikin IndustriesLtd

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Can any of the company-specific risk be diversified away by investing in both BlueLinx Holdings and Daikin IndustriesLtd 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 Daikin IndustriesLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueLinx Holdings and Daikin IndustriesLtd, you can compare the effects of market volatilities on BlueLinx Holdings and Daikin IndustriesLtd 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 Daikin IndustriesLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueLinx Holdings and Daikin IndustriesLtd.

Diversification Opportunities for BlueLinx Holdings and Daikin IndustriesLtd

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between BlueLinx and Daikin is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BlueLinx Holdings and Daikin IndustriesLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daikin IndustriesLtd 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 Daikin IndustriesLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daikin IndustriesLtd has no effect on the direction of BlueLinx Holdings i.e., BlueLinx Holdings and Daikin IndustriesLtd go up and down completely randomly.

Pair Corralation between BlueLinx Holdings and Daikin IndustriesLtd

Considering the 90-day investment horizon BlueLinx Holdings is expected to under-perform the Daikin IndustriesLtd. In addition to that, BlueLinx Holdings is 1.24 times more volatile than Daikin IndustriesLtd. It trades about 0.0 of its total potential returns per unit of risk. Daikin IndustriesLtd is currently generating about 0.04 per unit of volatility. If you would invest  15,566  in Daikin IndustriesLtd on September 10, 2022 and sell it today you would earn a total of  618.00  from holding Daikin IndustriesLtd or generate 3.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

BlueLinx Holdings  vs.  Daikin IndustriesLtd

 Performance (%) 
       Timeline  
BlueLinx Holdings 
BlueLinx Performance
0 of 100
Over the last 90 days BlueLinx Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BlueLinx Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BlueLinx Price Channel

Daikin IndustriesLtd 
Daikin Performance
0 of 100
Over the last 90 days Daikin IndustriesLtd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Daikin IndustriesLtd is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Daikin Price Channel

BlueLinx Holdings and Daikin IndustriesLtd Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BlueLinx Holdings and Daikin IndustriesLtd

The main advantage of trading using opposite BlueLinx Holdings and Daikin IndustriesLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueLinx Holdings position performs unexpectedly, Daikin IndustriesLtd 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 Daikin IndustriesLtd will offset losses from the drop in Daikin IndustriesLtd's long position.
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The idea behind BlueLinx Holdings and Daikin IndustriesLtd 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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