Correlation Between Bluelinx Holdings and Qantas Airways

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

Diversification Opportunities for Bluelinx Holdings and Qantas Airways

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bluelinx and Qantas is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bluelinx Holdings and Qantas Airways ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways ADR 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways ADR has no effect on the direction of Bluelinx Holdings i.e., Bluelinx Holdings and Qantas Airways go up and down completely randomly.

Pair Corralation between Bluelinx Holdings and Qantas Airways

Considering the 90-day investment horizon Bluelinx Holdings is expected to generate 1.38 times more return on investment than Qantas Airways. However, Bluelinx Holdings is 1.38 times more volatile than Qantas Airways ADR. It trades about 0.01 of its potential returns per unit of risk. Qantas Airways ADR is currently generating about -0.06 per unit of risk. If you would invest  8,367  in Bluelinx Holdings on May 11, 2022 and sell it today you would lose (217.00)  from holding Bluelinx Holdings or give up 2.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.39%
ValuesDaily Returns

Bluelinx Holdings  vs.  Qantas Airways ADR

 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

Qantas Airways ADR 
Qantas Performance
0 of 100
Over the last 90 days Qantas Airways ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Qantas Price Channel

Bluelinx Holdings and Qantas Airways Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bluelinx Holdings and Qantas Airways

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

Qantas Airways ADR

Pair trading matchups for Qantas Airways

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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