Correlation Between Core Main and Distribution Solutions
Can any of the company-specific risk be diversified away by investing in both Core Main and Distribution Solutions 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 Core Main and Distribution Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Main and Distribution Solutions Group, you can compare the effects of market volatilities on Core Main and Distribution Solutions 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 Core Main with a short position of Distribution Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Main and Distribution Solutions.
Diversification Opportunities for Core Main and Distribution Solutions
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Core and Distribution is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and Distribution Solutions Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribution Solutions and Core Main 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 Core Main are associated (or correlated) with Distribution Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribution Solutions has no effect on the direction of Core Main i.e., Core Main and Distribution Solutions go up and down completely randomly.
Pair Corralation between Core Main and Distribution Solutions
Considering the 90-day investment horizon Core Main is expected to generate 1.59 times more return on investment than Distribution Solutions. However, Core Main is 1.59 times more volatile than Distribution Solutions Group. It trades about 0.26 of its potential returns per unit of risk. Distribution Solutions Group is currently generating about 0.14 per unit of risk. If you would invest 5,164 in Core Main on March 10, 2025 and sell it today you would earn a total of 804.00 from holding Core Main or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Main vs. Distribution Solutions Group
Performance |
| Timeline |
| Core Main |
| Distribution Solutions |
Core Main and Distribution Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Main and Distribution Solutions
The main advantage of trading using opposite Core Main and Distribution Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Main position performs unexpectedly, Distribution Solutions 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 Distribution Solutions will offset losses from the drop in Distribution Solutions' long position.| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx Holdings |
| Distribution Solutions vs. Global Industrial Co | Distribution Solutions vs. Core Main | Distribution Solutions vs. Applied Industrial Technologies | Distribution Solutions vs. BlueLinx Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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