Correlation Between Blue Star and Big Ridge
Can any of the company-specific risk be diversified away by investing in both Blue Star and Big Ridge 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 Blue Star and Big Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Star Gold and Big Ridge Gold, you can compare the effects of market volatilities on Blue Star and Big Ridge 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 Blue Star with a short position of Big Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Big Ridge.
Diversification Opportunities for Blue Star and Big Ridge
Pay attention - limited upside
The 3 months correlation between Blue and Big is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and Blue Star 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 Blue Star Gold are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Blue Star i.e., Blue Star and Big Ridge go up and down completely randomly.
Pair Corralation between Blue Star and Big Ridge
Assuming the 90 days horizon Blue Star Gold is expected to generate 0.08 times more return on investment than Big Ridge. However, Blue Star Gold is 11.8 times less risky than Big Ridge. It trades about -0.21 of its potential returns per unit of risk. Big Ridge Gold is currently generating about -0.08 per unit of risk. If you would invest 3.58 in Blue Star Gold on August 29, 2024 and sell it today you would lose (0.09) from holding Blue Star Gold or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Blue Star Gold vs. Big Ridge Gold
Performance |
| Timeline |
| Blue Star Gold |
| Big Ridge Gold |
Blue Star and Big Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Star and Big Ridge
The main advantage of trading using opposite Blue Star and Big Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Star position performs unexpectedly, Big Ridge 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 Big Ridge will offset losses from the drop in Big Ridge's long position.| Blue Star vs. Argo Gold | Blue Star vs. Minnova Corp | Blue Star vs. Angkor Resources Corp | Blue Star vs. Advance United Holdings |
| Big Ridge vs. Vertiv Holdings Co | Big Ridge vs. Nasdaq Inc | Big Ridge vs. McDonalds | Big Ridge vs. Walmart |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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