Correlation Between Pool and SiteOne Landscape

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

By analyzing existing cross correlation between Pool Corporation and SiteOne Landscape Supply, you can compare the effects of market volatilities on Pool and SiteOne Landscape 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 Pool with a short position of SiteOne Landscape. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and SiteOne Landscape.

Diversification Opportunities for Pool and SiteOne Landscape

0.64

Correlation Coefficient

Pool  SiteOne Landscape

Poor diversification

The 3 months correlation between Pool and SiteOne is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and SiteOne Landscape Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiteOne Landscape Supply and Pool 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 Pool Corporation are associated (or correlated) with SiteOne Landscape. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiteOne Landscape Supply has no effect on the direction of Pool i.e., Pool and SiteOne Landscape go up and down completely randomly.

Pair Corralation between Pool and SiteOne Landscape

Given the investment horizon of 90 days Pool Corporation is expected to under-perform the SiteOne Landscape. But the stock apears to be less risky and, when comparing its historical volatility, Pool Corporation is 1.27 times less risky than SiteOne Landscape. The stock trades about -0.02 of its potential returns per unit of risk. The SiteOne Landscape Supply is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  15,382  in SiteOne Landscape Supply on May 3, 2025 and sell it today you would lose (1,599) from holding SiteOne Landscape Supply or give up 10.4% of portfolio value over 90 days.

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

Pool Corp.  vs.  SiteOne Landscape Supply

Pool

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pool Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pool is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

SiteOne Landscape Supply

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SiteOne Landscape Supply are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SiteOne Landscape exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pool and SiteOne Landscape

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

The idea behind Pool Corporation and SiteOne Landscape Supply 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.