Correlation Between BLZ and DCN
Can any of the company-specific risk be diversified away by investing in both BLZ and DCN 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 BLZ and DCN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and DCN, you can compare the effects of market volatilities on BLZ and DCN 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 BLZ with a short position of DCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and DCN.
Diversification Opportunities for BLZ and DCN
Pay attention - limited upside
The 3 months correlation between BLZ and DCN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and DCN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCN and BLZ 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 BLZ are associated (or correlated) with DCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCN has no effect on the direction of BLZ i.e., BLZ and DCN go up and down completely randomly.
Pair Corralation between BLZ and DCN
If you would invest 11.00 in BLZ on September 2, 2024 and sell it today you would earn a total of 5.00 from holding BLZ or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLZ vs. DCN
Performance |
| Timeline |
| BLZ |
| DCN |
BLZ and DCN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLZ and DCN
The main advantage of trading using opposite BLZ and DCN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, DCN 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 DCN will offset losses from the drop in DCN's long position.The idea behind BLZ and DCN 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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