Correlation Between Porch and Blend Labs
Can any of the company-specific risk be diversified away by investing in both Porch and Blend Labs 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 Porch and Blend Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porch Group and Blend Labs, you can compare the effects of market volatilities on Porch and Blend Labs 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 Porch with a short position of Blend Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porch and Blend Labs.
Diversification Opportunities for Porch and Blend Labs
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Porch and Blend is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Porch Group and Blend Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blend Labs and Porch 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 Porch Group are associated (or correlated) with Blend Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blend Labs has no effect on the direction of Porch i.e., Porch and Blend Labs go up and down completely randomly.
Pair Corralation between Porch and Blend Labs
Given the investment horizon of 90 days Porch Group is expected to generate 4.45 times more return on investment than Blend Labs. However, Porch is 4.45 times more volatile than Blend Labs. It trades about 0.3 of its potential returns per unit of risk. Blend Labs is currently generating about 0.47 per unit of risk. If you would invest 128.00 in Porch Group on August 24, 2024 and sell it today you would earn a total of 228.00 from holding Porch Group or generate 178.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Porch Group vs. Blend Labs
Performance |
| Timeline |
| Porch Group |
| Blend Labs |
Porch and Blend Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porch and Blend Labs
The main advantage of trading using opposite Porch and Blend Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porch position performs unexpectedly, Blend Labs 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 Blend Labs will offset losses from the drop in Blend Labs' long position.The idea behind Porch Group and Blend Labs 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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