Correlation Between Studio City and Blue Ridge

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Can any of the company-specific risk be diversified away by investing in both Studio City and Blue Ridge 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 Studio City and Blue Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Studio City International and Blue Ridge Real, you can compare the effects of market volatilities on Studio City and Blue Ridge 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 Studio City with a short position of Blue Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Studio City and Blue Ridge.

Diversification Opportunities for Studio City and Blue Ridge

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Studio and Blue is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Studio City International and Blue Ridge Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ridge Real and Studio City 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 Studio City International are associated (or correlated) with Blue Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ridge Real has no effect on the direction of Studio City i.e., Studio City and Blue Ridge go up and down completely randomly.

Pair Corralation between Studio City and Blue Ridge

Considering the 90-day investment horizon Studio City International is expected to generate 2.72 times more return on investment than Blue Ridge. However, Studio City is 2.72 times more volatile than Blue Ridge Real. It trades about 0.02 of its potential returns per unit of risk. Blue Ridge Real is currently generating about -0.01 per unit of risk. If you would invest  665.00  in Studio City International on September 25, 2024 and sell it today you would lose (93.00) from holding Studio City International or give up 13.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Studio City International  vs.  Blue Ridge Real

 Performance 
       Timeline  
Studio City International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Studio City International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Studio City is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Blue Ridge Real 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Blue Ridge Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Blue Ridge is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Studio City and Blue Ridge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Studio City and Blue Ridge

The main advantage of trading using opposite Studio City and Blue Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studio City position performs unexpectedly, Blue Ridge 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 Ridge will offset losses from the drop in Blue Ridge's long position.
The idea behind Studio City International and Blue Ridge Real 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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