Correlation Between BLZ and Numeraire

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

By analyzing existing cross correlation between BLZ and Numeraire, you can compare the effects of market volatilities on BLZ and Numeraire 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 Numeraire. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and Numeraire.

Diversification Opportunities for BLZ and Numeraire

0.52

Correlation Coefficient

BLZ  Numeraire

Very weak diversification

The 3 months correlation between BLZ and Numeraire is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and Numeraire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numeraire 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 Numeraire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numeraire has no effect on the direction of BLZ i.e., BLZ and Numeraire go up and down completely randomly.

Pair Corralation between BLZ and Numeraire

Assuming the 90 days trading horizon BLZ is expected to generate 1.62 times less return on investment than Numeraire. In addition to that, BLZ is 1.27 times more volatile than Numeraire. It trades about 0.05 of its total potential returns per unit of risk. Numeraire is currently generating about 0.1 per unit of volatility. If you would invest  1,475  in Numeraire on August 30, 2024 and sell it today you would earn a total of  423.00  from holding Numeraire or generate 28.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

BLZ  vs.  Numeraire

BLZ

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BLZ are ranked lower than 3 (%) 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.

Numeraire

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with BLZ and Numeraire

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

The idea behind BLZ and Numeraire 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.