Correlation Between Bluelinea and DLSI
Can any of the company-specific risk be diversified away by investing in both Bluelinea and DLSI 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 Bluelinea and DLSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluelinea SA and DLSI, you can compare the effects of market volatilities on Bluelinea and DLSI 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 Bluelinea with a short position of DLSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluelinea and DLSI.
Diversification Opportunities for Bluelinea and DLSI
Excellent diversification
The 3 months correlation between Bluelinea and DLSI is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bluelinea SA and DLSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLSI and Bluelinea 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 Bluelinea SA are associated (or correlated) with DLSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLSI has no effect on the direction of Bluelinea i.e., Bluelinea and DLSI go up and down completely randomly.
Pair Corralation between Bluelinea and DLSI
Assuming the 90 days trading horizon Bluelinea SA is expected to under-perform the DLSI. But the stock apears to be less risky and, when comparing its historical volatility, Bluelinea SA is 1.09 times less risky than DLSI. The stock trades about -0.21 of its potential returns per unit of risk. The DLSI is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,220 in DLSI on September 1, 2024 and sell it today you would earn a total of 40.00 from holding DLSI or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bluelinea SA vs. DLSI
Performance |
| Timeline |
| Bluelinea SA |
| DLSI |
Bluelinea and DLSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluelinea and DLSI
The main advantage of trading using opposite Bluelinea and DLSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluelinea position performs unexpectedly, DLSI 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 DLSI will offset losses from the drop in DLSI's long position.The idea behind Bluelinea SA and DLSI 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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