Correlation Between Distribution Solutions and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both Distribution Solutions and Beacon Roofing 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 Distribution Solutions and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribution Solutions Group and Beacon Roofing Supply, you can compare the effects of market volatilities on Distribution Solutions and Beacon Roofing 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 Distribution Solutions with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribution Solutions and Beacon Roofing.
Diversification Opportunities for Distribution Solutions and Beacon Roofing
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Distribution and Beacon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Distribution Solutions Group and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and Distribution Solutions 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 Distribution Solutions Group are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Distribution Solutions i.e., Distribution Solutions and Beacon Roofing go up and down completely randomly.
Pair Corralation between Distribution Solutions and Beacon Roofing
Given the investment horizon of 90 days Distribution Solutions is expected to generate 15.65 times less return on investment than Beacon Roofing. In addition to that, Distribution Solutions is 1.34 times more volatile than Beacon Roofing Supply. It trades about 0.01 of its total potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.12 per unit of volatility. If you would invest 8,663 in Beacon Roofing Supply on March 13, 2024 and sell it today you would earn a total of 1,007 from holding Beacon Roofing Supply or generate 11.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Distribution Solutions Group vs. Beacon Roofing Supply
Performance |
Timeline |
Distribution Solutions |
Beacon Roofing Supply |
Distribution Solutions and Beacon Roofing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Distribution Solutions and Beacon Roofing
The main advantage of trading using opposite Distribution Solutions and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribution Solutions position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.Distribution Solutions vs. Global Industrial Co | Distribution Solutions vs. Pool Corporation | Distribution Solutions vs. Fastenal Company | Distribution Solutions vs. Core Main |
Beacon Roofing vs. Global Industrial Co | Beacon Roofing vs. Pool Corporation | Beacon Roofing vs. Fastenal Company | Beacon Roofing vs. Core Main |
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 the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |