Correlation Between BLZ and ETN
Can any of the company-specific risk be diversified away by investing in both BLZ and ETN 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 ETN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and ETN, you can compare the effects of market volatilities on BLZ and ETN 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 ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and ETN.
Diversification Opportunities for BLZ and ETN
Average diversification
The 3 months correlation between BLZ and ETN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETN 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 ETN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETN has no effect on the direction of BLZ i.e., BLZ and ETN go up and down completely randomly.
Pair Corralation between BLZ and ETN
Assuming the 90 days trading horizon BLZ is expected to generate 2.81 times less return on investment than ETN. But when comparing it to its historical volatility, BLZ is 1.93 times less risky than ETN. It trades about 0.07 of its potential returns per unit of risk. ETN is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.18 in ETN on August 30, 2024 and sell it today you would earn a total of 0.07 from holding ETN or generate 38.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLZ vs. ETN
Performance |
| Timeline |
| BLZ |
| ETN |
BLZ and ETN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLZ and ETN
The main advantage of trading using opposite BLZ and ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, ETN 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 ETN will offset losses from the drop in ETN's long position.The idea behind BLZ and ETN 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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