Correlation Between Blue Label and Trencor
Can any of the company-specific risk be diversified away by investing in both Blue Label and Trencor 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 Label and Trencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Label Telecoms and Trencor, you can compare the effects of market volatilities on Blue Label and Trencor 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 Label with a short position of Trencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Label and Trencor.
Diversification Opportunities for Blue Label and Trencor
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Blue and Trencor is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Blue Label Telecoms and Trencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trencor and Blue Label 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 Label Telecoms are associated (or correlated) with Trencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trencor has no effect on the direction of Blue Label i.e., Blue Label and Trencor go up and down completely randomly.
Pair Corralation between Blue Label and Trencor
Assuming the 90 days trading horizon Blue Label Telecoms is expected to generate 1.08 times more return on investment than Trencor. However, Blue Label is 1.08 times more volatile than Trencor. It trades about 0.09 of its potential returns per unit of risk. Trencor is currently generating about 0.02 per unit of risk. If you would invest 43,300 in Blue Label Telecoms on September 3, 2024 and sell it today you would earn a total of 9,900 from holding Blue Label Telecoms or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blue Label Telecoms vs. Trencor
Performance |
| Timeline |
| Blue Label Telecoms |
| Trencor |
Blue Label and Trencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Label and Trencor
The main advantage of trading using opposite Blue Label and Trencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Label position performs unexpectedly, Trencor 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 Trencor will offset losses from the drop in Trencor's long position.| Blue Label vs. Brimstone Investment | Blue Label vs. Master Drilling Group | Blue Label vs. Astral Foods | Blue Label vs. Harmony Gold Mining |
| Trencor vs. Ascendis Health | Trencor vs. Trematon Capital Investments | Trencor vs. RCL Foods | Trencor vs. Life Healthcare |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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