Correlation Between BLZ and Basic Attention

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

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

Diversification Opportunities for BLZ and Basic Attention

0.57

Correlation Coefficient

BLZ  Basic Attention

Very weak diversification

The 3 months correlation between BLZ and Basic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and Basic Attention Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Attention Token and BLZ 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 BLZ are associated (or correlated) with Basic Attention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Attention Token has no effect on the direction of BLZ i.e., BLZ and Basic Attention go up and down completely randomly.

Pair Corralation between BLZ and Basic Attention

Assuming the 90 days trading horizon BLZ is expected to generate 1.98 times less return on investment than Basic Attention. In addition to that, BLZ is 1.16 times more volatile than Basic Attention Token. It trades about 0.1 of its total potential returns per unit of risk. Basic Attention Token is currently generating about 0.24 per unit of volatility. If you would invest  16.00  in Basic Attention Token on September 3, 2024 and sell it today you would earn a total of  17.00  from holding Basic Attention Token or generate 106.25% return on investment over 90 days.

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

BLZ  vs.  Basic Attention Token

BLZ

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BLZ are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BLZ exhibited solid returns over the last few months and may actually be approaching a breakup point.

Basic Attention Token

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Attention Token are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Basic Attention exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BLZ and Basic Attention

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

The idea behind BLZ and Basic Attention Token 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.