Correlation Between BLZ and GMX
Can any of the company-specific risk be diversified away by investing in both BLZ and GMX 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 GMX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and GMX, you can compare the effects of market volatilities on BLZ and GMX 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 GMX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and GMX.
Diversification Opportunities for BLZ and GMX
Very weak diversification
The 3 months correlation between BLZ and GMX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and GMX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMX 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 GMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMX has no effect on the direction of BLZ i.e., BLZ and GMX go up and down completely randomly.
Pair Corralation between BLZ and GMX
Assuming the 90 days trading horizon BLZ is expected to generate 1.37 times more return on investment than GMX. However, BLZ is 1.37 times more volatile than GMX. It trades about 0.43 of its potential returns per unit of risk. GMX is currently generating about 0.43 per unit of risk. If you would invest 9.45 in BLZ on September 2, 2024 and sell it today you would earn a total of 6.55 from holding BLZ or generate 69.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLZ vs. GMX
Performance |
| Timeline |
| BLZ |
| GMX |
BLZ and GMX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLZ and GMX
The main advantage of trading using opposite BLZ and GMX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, GMX 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 GMX will offset losses from the drop in GMX's long position.The idea behind BLZ and GMX 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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