Correlation Between Blue Jet and Life Insurance

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Can any of the company-specific risk be diversified away by investing in both Blue Jet and Life Insurance 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 Jet and Life Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Jet Healthcare and Life Insurance, you can compare the effects of market volatilities on Blue Jet and Life Insurance 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 Jet with a short position of Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Jet and Life Insurance.

Diversification Opportunities for Blue Jet and Life Insurance

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Blue and Life is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Blue Jet Healthcare and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and Blue Jet 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 Jet Healthcare are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Blue Jet i.e., Blue Jet and Life Insurance go up and down completely randomly.

Pair Corralation between Blue Jet and Life Insurance

Assuming the 90 days trading horizon Blue Jet Healthcare is expected to generate 1.76 times more return on investment than Life Insurance. However, Blue Jet is 1.76 times more volatile than Life Insurance. It trades about 0.17 of its potential returns per unit of risk. Life Insurance is currently generating about 0.2 per unit of risk. If you would invest  47,280  in Blue Jet Healthcare on September 1, 2024 and sell it today you would earn a total of  4,660  from holding Blue Jet Healthcare or generate 9.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Blue Jet Healthcare  vs.  Life Insurance

 Performance 
       Timeline  
Blue Jet Healthcare 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking indicators, Blue Jet unveiled solid returns over the last few months and may actually be approaching a breakup point.
Life Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Blue Jet and Life Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blue Jet and Life Insurance

The main advantage of trading using opposite Blue Jet and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Jet position performs unexpectedly, Life Insurance 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 Life Insurance will offset losses from the drop in Life Insurance's long position.
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The idea behind Blue Jet Healthcare and Life Insurance 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.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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