Correlation Between BLZ and JAR
Can any of the company-specific risk be diversified away by investing in both BLZ and JAR 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 JAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and JAR, you can compare the effects of market volatilities on BLZ and JAR 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 JAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and JAR.
Diversification Opportunities for BLZ and JAR
Good diversification
The 3 months correlation between BLZ and JAR is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and JAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAR 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 JAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAR has no effect on the direction of BLZ i.e., BLZ and JAR go up and down completely randomly.
Pair Corralation between BLZ and JAR
Assuming the 90 days trading horizon BLZ is expected to under-perform the JAR. In addition to that, BLZ is 2.06 times more volatile than JAR. It trades about -0.12 of its total potential returns per unit of risk. JAR is currently generating about -0.1 per unit of volatility. If you would invest 0.37 in JAR on November 9, 2024 and sell it today you would lose (0.03) from holding JAR or give up 8.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BLZ vs. JAR
Performance |
| Timeline |
| BLZ |
| JAR |
BLZ and JAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLZ and JAR
The main advantage of trading using opposite BLZ and JAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, JAR 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 JAR will offset losses from the drop in JAR's long position.The idea behind BLZ and JAR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |