Correlation Between BLZ and Ontology Gas
Can any of the company-specific risk be diversified away by investing in both BLZ and Ontology Gas 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 Ontology Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and Ontology Gas, you can compare the effects of market volatilities on BLZ and Ontology Gas 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 Ontology Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and Ontology Gas.
Diversification Opportunities for BLZ and Ontology Gas
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BLZ and Ontology is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and Ontology Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontology Gas 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 Ontology Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontology Gas has no effect on the direction of BLZ i.e., BLZ and Ontology Gas go up and down completely randomly.
Pair Corralation between BLZ and Ontology Gas
Assuming the 90 days trading horizon BLZ is expected to under-perform the Ontology Gas. In addition to that, BLZ is 1.18 times more volatile than Ontology Gas. It trades about -0.01 of its total potential returns per unit of risk. Ontology Gas is currently generating about 0.0 per unit of volatility. If you would invest 47.00 in Ontology Gas on August 27, 2024 and sell it today you would lose (9.00) from holding Ontology Gas or give up 19.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 51.92% |
| Values | Daily Returns |
BLZ vs. Ontology Gas
Performance |
| Timeline |
| BLZ |
| Ontology Gas |
BLZ and Ontology Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLZ and Ontology Gas
The main advantage of trading using opposite BLZ and Ontology Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, Ontology Gas 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 Ontology Gas will offset losses from the drop in Ontology Gas' long position.The idea behind BLZ and Ontology Gas 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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