Correlation Between Blue Line and Brinks
Can any of the company-specific risk be diversified away by investing in both Blue Line and Brinks 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 Line and Brinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Line Protection and Brinks Company, you can compare the effects of market volatilities on Blue Line and Brinks 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 Line with a short position of Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Line and Brinks.
Diversification Opportunities for Blue Line and Brinks
Poor diversification
The 3 months correlation between Blue and Brinks is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Blue Line Protection and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company and Blue Line 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 Line Protection are associated (or correlated) with Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of Blue Line i.e., Blue Line and Brinks go up and down completely randomly.
Pair Corralation between Blue Line and Brinks
Given the investment horizon of 90 days Blue Line Protection is expected to generate 11.8 times more return on investment than Brinks. However, Blue Line is 11.8 times more volatile than Brinks Company. It trades about 0.07 of its potential returns per unit of risk. Brinks Company is currently generating about 0.07 per unit of risk. If you would invest 23.00 in Blue Line Protection on September 3, 2024 and sell it today you would lose (16.50) from holding Blue Line Protection or give up 71.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blue Line Protection vs. Brinks Company
Performance |
| Timeline |
| Blue Line Protection |
| Brinks Company |
Blue Line and Brinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Line and Brinks
The main advantage of trading using opposite Blue Line and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Line position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.| Blue Line vs. BIO Key International | Blue Line vs. LogicMark | Blue Line vs. Knightscope | Blue Line vs. Guardforce AI Co |
| Brinks vs. MSA Safety | Brinks vs. Resideo Technologies | Brinks vs. Mistras Group | Brinks vs. NL Industries |
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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