Correlation Between AKRO and BLZ
Can any of the company-specific risk be diversified away by investing in both AKRO and BLZ 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 AKRO and BLZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKRO and BLZ, you can compare the effects of market volatilities on AKRO and BLZ 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 AKRO with a short position of BLZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKRO and BLZ.
Diversification Opportunities for AKRO and BLZ
Almost no diversification
The 3 months correlation between AKRO and BLZ is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding AKRO and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and AKRO 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 AKRO are associated (or correlated) with BLZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLZ has no effect on the direction of AKRO i.e., AKRO and BLZ go up and down completely randomly.
Pair Corralation between AKRO and BLZ
Assuming the 90 days trading horizon AKRO is expected to generate 0.87 times more return on investment than BLZ. However, AKRO is 1.15 times less risky than BLZ. It trades about -0.11 of its potential returns per unit of risk. BLZ is currently generating about -0.11 per unit of risk. If you would invest 0.05 in AKRO on November 8, 2024 and sell it today you would lose (0.01) from holding AKRO or give up 17.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKRO vs. BLZ
Performance |
| Timeline |
| AKRO |
| BLZ |
AKRO and BLZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKRO and BLZ
The main advantage of trading using opposite AKRO and BLZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKRO position performs unexpectedly, BLZ 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 BLZ will offset losses from the drop in BLZ's long position.The idea behind AKRO and BLZ 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |