Correlation Between Blue Chip and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Blue Chip and Blue Chip 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 Chip and Blue Chip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Chip Fund and Blue Chip Fund, you can compare the effects of market volatilities on Blue Chip and Blue Chip 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 Chip with a short position of Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Chip and Blue Chip.
Diversification Opportunities for Blue Chip and Blue Chip
No risk reduction
The 3 months correlation between Blue and Blue is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Blue Chip Fund and Blue Chip Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Fund and Blue Chip 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 Chip Fund are associated (or correlated) with Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Fund has no effect on the direction of Blue Chip i.e., Blue Chip and Blue Chip go up and down completely randomly.
Pair Corralation between Blue Chip and Blue Chip
Assuming the 90 days horizon Blue Chip Fund is expected to generate 1.0 times more return on investment than Blue Chip. However, Blue Chip is 1.0 times more volatile than Blue Chip Fund. It trades about 0.13 of its potential returns per unit of risk. Blue Chip Fund is currently generating about 0.13 per unit of risk. If you would invest 3,326 in Blue Chip Fund on September 2, 2024 and sell it today you would earn a total of 1,613 from holding Blue Chip Fund or generate 48.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blue Chip Fund vs. Blue Chip Fund
Performance |
| Timeline |
| Blue Chip Fund |
| Blue Chip Fund |
Blue Chip and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Chip and Blue Chip
The main advantage of trading using opposite Blue Chip and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Chip position performs unexpectedly, Blue Chip 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 Chip will offset losses from the drop in Blue Chip's long position.| Blue Chip vs. Ultra Short Fixed Income | Blue Chip vs. Astor Longshort Fund | Blue Chip vs. Maryland Short Term Tax Free | Blue Chip vs. Aqr Long Short Equity |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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