Correlation Between BLZ and UTK
Can any of the company-specific risk be diversified away by investing in both BLZ and UTK 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 UTK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and UTK, you can compare the effects of market volatilities on BLZ and UTK 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 UTK. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and UTK.
Diversification Opportunities for BLZ and UTK
Modest diversification
The 3 months correlation between BLZ and UTK is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and UTK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTK 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 UTK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTK has no effect on the direction of BLZ i.e., BLZ and UTK go up and down completely randomly.
Pair Corralation between BLZ and UTK
Assuming the 90 days trading horizon BLZ is expected to under-perform the UTK. But the crypto coin apears to be less risky and, when comparing its historical volatility, BLZ is 7.75 times less risky than UTK. The crypto coin trades about -0.17 of its potential returns per unit of risk. The UTK is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3.84 in UTK on January 11, 2025 and sell it today you would earn a total of 4.37 from holding UTK or generate 113.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLZ vs. UTK
Performance |
| Timeline |
| BLZ |
| UTK |
BLZ and UTK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLZ and UTK
The main advantage of trading using opposite BLZ and UTK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, UTK 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 UTK will offset losses from the drop in UTK's long position.The idea behind BLZ and UTK 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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