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

0.81

Correlation Coefficient

Core Main  Distribution Solutions

Very poor diversification

The 3 months correlation between Core and Distribution is 0.81. 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 1.05 times more return on investment than Distribution Solutions. However, Core Main is 1.05 times more volatile than Distribution Solutions Group. It trades about 0.16 of its potential returns per unit of risk. Distribution Solutions Group is currently generating about 0.1 per unit of risk. If you would invest  5,388  in Core Main on May 2, 2025 and sell it today you would earn a total of  1,068  from holding Core Main or generate 19.82% return on investment over 90 days.

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

Core Main  vs.  Distribution Solutions Group

Core Main

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Core Main are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Core Main displayed solid returns over the last few months and may actually be approaching a breakup point.

Distribution Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Distribution Solutions Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Distribution Solutions may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

The idea behind Core Main and Distribution Solutions Group 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.