Correlation Between MSC Industrial and BlueLinx Holdings

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

By analyzing existing cross correlation between MSC Industrial Direct and BlueLinx Holdings, you can compare the effects of market volatilities on MSC Industrial and BlueLinx Holdings 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 MSC Industrial with a short position of BlueLinx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSC Industrial and BlueLinx Holdings.

Diversification Opportunities for MSC Industrial and BlueLinx Holdings

0.88

Correlation Coefficient

MSC Industrial  BlueLinx Holdings

Very poor diversification

The 3 months correlation between MSC and BlueLinx is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MSC Industrial Direct and BlueLinx Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueLinx Holdings and MSC Industrial 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 MSC Industrial Direct are associated (or correlated) with BlueLinx Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueLinx Holdings has no effect on the direction of MSC Industrial i.e., MSC Industrial and BlueLinx Holdings go up and down completely randomly.

Pair Corralation between MSC Industrial and BlueLinx Holdings

Considering the 90-day investment horizon MSC Industrial is expected to generate 1.87 times less return on investment than BlueLinx Holdings. But when comparing it to its historical volatility, MSC Industrial Direct is 1.95 times less risky than BlueLinx Holdings. It trades about 0.09 of its potential returns per unit of risk. BlueLinx Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,979  in BlueLinx Holdings on May 20, 2025 and sell it today you would earn a total of  972.00  from holding BlueLinx Holdings or generate 13.93% return on investment over 90 days.

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

MSC Industrial Direct  vs.  BlueLinx Holdings

MSC Industrial Direct

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in MSC Industrial Direct are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, MSC Industrial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

BlueLinx Holdings

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in BlueLinx Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BlueLinx Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSC Industrial and BlueLinx Holdings

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

The idea behind MSC Industrial Direct and BlueLinx Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.