Correlation Between BZAM and Pure Extracts
Can any of the company-specific risk be diversified away by investing in both BZAM and Pure Extracts 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 BZAM and Pure Extracts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BZAM and Pure Extracts Technologies, you can compare the effects of market volatilities on BZAM and Pure Extracts 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 BZAM with a short position of Pure Extracts. Check out your portfolio center. Please also check ongoing floating volatility patterns of BZAM and Pure Extracts.
Diversification Opportunities for BZAM and Pure Extracts
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BZAM and Pure is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BZAM and Pure Extracts Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Extracts Techno and BZAM 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 BZAM are associated (or correlated) with Pure Extracts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Extracts Techno has no effect on the direction of BZAM i.e., BZAM and Pure Extracts go up and down completely randomly.
Pair Corralation between BZAM and Pure Extracts
Assuming the 90 days horizon BZAM is expected to generate 4.22 times more return on investment than Pure Extracts. However, BZAM is 4.22 times more volatile than Pure Extracts Technologies. It trades about 0.05 of its potential returns per unit of risk. Pure Extracts Technologies is currently generating about 0.05 per unit of risk. If you would invest 41.00 in BZAM on August 30, 2024 and sell it today you would lose (41.00) from holding BZAM or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.17% |
| Values | Daily Returns |
BZAM vs. Pure Extracts Technologies
Performance |
| Timeline |
| BZAM |
| Pure Extracts Techno |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BZAM and Pure Extracts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BZAM and Pure Extracts
The main advantage of trading using opposite BZAM and Pure Extracts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BZAM position performs unexpectedly, Pure Extracts 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 Pure Extracts will offset losses from the drop in Pure Extracts' long position.| BZAM vs. Southwest Gas Holdings | BZAM vs. WEC Energy Group | BZAM vs. Topbuild Corp | BZAM vs. CenterPoint Energy |
| Pure Extracts vs. Benchmark Botanics | Pure Extracts vs. Speakeasy Cannabis Club | Pure Extracts vs. City View Green | Pure Extracts vs. BC Craft Supply |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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