Correlation Between Matson and Builders FirstSource

Can any of the company-specific risk be diversified away by investing in both Matson and Builders FirstSource 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 Matson and Builders FirstSource into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Matson Inc and Builders FirstSource, you can compare the effects of market volatilities on Matson and Builders FirstSource 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 Matson with a short position of Builders FirstSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson and Builders FirstSource.

Diversification Opportunities for Matson and Builders FirstSource

-0.32

Correlation Coefficient

Matson  Builders FirstSource

Very good diversification

The 3 months correlation between Matson and Builders is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Matson Inc and Builders FirstSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Builders FirstSource and Matson 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 Matson Inc are associated (or correlated) with Builders FirstSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Builders FirstSource has no effect on the direction of Matson i.e., Matson and Builders FirstSource go up and down completely randomly.

Pair Corralation between Matson and Builders FirstSource

Given the investment horizon of 90 days Matson Inc is expected to under-perform the Builders FirstSource. But the stock apears to be less risky and, when comparing its historical volatility, Matson Inc is 1.54 times less risky than Builders FirstSource. The stock trades about -0.08 of its potential returns per unit of risk. The Builders FirstSource is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,760  in Builders FirstSource on May 18, 2025 and sell it today you would earn a total of  1,928  from holding Builders FirstSource or generate 16.39% return on investment over 90 days.

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

Matson Inc  vs.  Builders FirstSource

Matson Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Matson Inc 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.

Builders FirstSource

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Builders FirstSource are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Builders FirstSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matson and Builders FirstSource

The main advantage of trading using opposite Matson and Builders FirstSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson position performs unexpectedly, Builders FirstSource 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 Builders FirstSource will offset losses from the drop in Builders FirstSource's long position.

The idea behind Matson Inc and Builders FirstSource 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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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.