Correlation Between NLG and BLZ
Can any of the company-specific risk be diversified away by investing in both NLG and BLZ 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 NLG and BLZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NLG and BLZ, you can compare the effects of market volatilities on NLG and BLZ 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 NLG with a short position of BLZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of NLG and BLZ.
Diversification Opportunities for NLG and BLZ
Excellent diversification
The 3 months correlation between NLG and BLZ is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NLG and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and NLG 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 NLG are associated (or correlated) with BLZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLZ has no effect on the direction of NLG i.e., NLG and BLZ go up and down completely randomly.
Pair Corralation between NLG and BLZ
If you would invest 10.00 in BLZ on August 30, 2024 and sell it today you would earn a total of 4.00 from holding BLZ or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
NLG vs. BLZ
Performance |
| Timeline |
| NLG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BLZ |
NLG and BLZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NLG and BLZ
The main advantage of trading using opposite NLG and BLZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NLG position performs unexpectedly, BLZ 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 BLZ will offset losses from the drop in BLZ's long position.The idea behind NLG and BLZ 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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