Correlation Between Blue Whale and ARYA Sciences
Can any of the company-specific risk be diversified away by investing in both Blue Whale and ARYA Sciences 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 Blue Whale and ARYA Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Whale Acquisition and ARYA Sciences Acquisition, you can compare the effects of market volatilities on Blue Whale and ARYA Sciences 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 Blue Whale with a short position of ARYA Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Whale and ARYA Sciences.
Diversification Opportunities for Blue Whale and ARYA Sciences
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Blue and ARYA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Blue Whale Acquisition and ARYA Sciences Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARYA Sciences Acquisition and Blue Whale 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 Blue Whale Acquisition are associated (or correlated) with ARYA Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARYA Sciences Acquisition has no effect on the direction of Blue Whale i.e., Blue Whale and ARYA Sciences go up and down completely randomly.
Pair Corralation between Blue Whale and ARYA Sciences
Assuming the 90 days horizon Blue Whale Acquisition is expected to generate 0.12 times more return on investment than ARYA Sciences. However, Blue Whale Acquisition is 8.06 times less risky than ARYA Sciences. It trades about 0.07 of its potential returns per unit of risk. ARYA Sciences Acquisition is currently generating about -0.04 per unit of risk. If you would invest 971.00 in Blue Whale Acquisition on August 26, 2024 and sell it today you would earn a total of 40.00 from holding Blue Whale Acquisition or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 36.57% |
| Values | Daily Returns |
Blue Whale Acquisition vs. ARYA Sciences Acquisition
Performance |
| Timeline |
| Blue Whale Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ARYA Sciences Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Blue Whale and ARYA Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Whale and ARYA Sciences
The main advantage of trading using opposite Blue Whale and ARYA Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Whale position performs unexpectedly, ARYA Sciences 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 ARYA Sciences will offset losses from the drop in ARYA Sciences' long position.The idea behind Blue Whale Acquisition and ARYA Sciences Acquisition 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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