Correlation Between BLZ and NULS
Can any of the company-specific risk be diversified away by investing in both BLZ and NULS 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 NULS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and NULS, you can compare the effects of market volatilities on BLZ and NULS 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 NULS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and NULS.
Diversification Opportunities for BLZ and NULS
Poor diversification
The 3 months correlation between BLZ and NULS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and NULS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NULS 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 NULS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NULS has no effect on the direction of BLZ i.e., BLZ and NULS go up and down completely randomly.
Pair Corralation between BLZ and NULS
Assuming the 90 days trading horizon BLZ is expected to generate 1.5 times less return on investment than NULS. In addition to that, BLZ is 1.2 times more volatile than NULS. It trades about 0.03 of its total potential returns per unit of risk. NULS is currently generating about 0.05 per unit of volatility. If you would invest 33.00 in NULS on August 24, 2024 and sell it today you would earn a total of 1.00 from holding NULS or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLZ vs. NULS
Performance |
| Timeline |
| BLZ |
| NULS |
BLZ and NULS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLZ and NULS
The main advantage of trading using opposite BLZ and NULS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, NULS 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 NULS will offset losses from the drop in NULS's long position.The idea behind BLZ and NULS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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