Correlation Between Dexterra and Blue Water
Can any of the company-specific risk be diversified away by investing in both Dexterra and Blue Water 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 Dexterra and Blue Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dexterra Group and Blue Water Ventures, you can compare the effects of market volatilities on Dexterra and Blue Water 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 Dexterra with a short position of Blue Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexterra and Blue Water.
Diversification Opportunities for Dexterra and Blue Water
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dexterra and Blue is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dexterra Group and Blue Water Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Water Ventures and Dexterra 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 Dexterra Group are associated (or correlated) with Blue Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Water Ventures has no effect on the direction of Dexterra i.e., Dexterra and Blue Water go up and down completely randomly.
Pair Corralation between Dexterra and Blue Water
Assuming the 90 days horizon Dexterra is expected to generate 11.0 times less return on investment than Blue Water. But when comparing it to its historical volatility, Dexterra Group is 16.31 times less risky than Blue Water. It trades about 0.32 of its potential returns per unit of risk. Blue Water Ventures is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Blue Water Ventures on January 13, 2025 and sell it today you would earn a total of 0.01 from holding Blue Water Ventures or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dexterra Group vs. Blue Water Ventures
Performance |
| Timeline |
| Dexterra Group |
| Blue Water Ventures |
Dexterra and Blue Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexterra and Blue Water
The main advantage of trading using opposite Dexterra and Blue Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexterra position performs unexpectedly, Blue Water 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 Blue Water will offset losses from the drop in Blue Water's long position.| Dexterra vs. Intertek Group Plc | Dexterra vs. Wildpack Beverage | Dexterra vs. DATA Communications Management | Dexterra vs. Mitie Group Plc |
| Blue Water vs. Mills Music Trust | Blue Water vs. Citrine Global Corp | Blue Water vs. DATA Communications Management | Blue Water vs. Ijj Corporation |
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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