Correlation Between Stem Holdings and BZAM
Can any of the company-specific risk be diversified away by investing in both Stem Holdings and BZAM 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 Stem Holdings and BZAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Holdings and BZAM, you can compare the effects of market volatilities on Stem Holdings and BZAM 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 Stem Holdings with a short position of BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem Holdings and BZAM.
Diversification Opportunities for Stem Holdings and BZAM
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stem and BZAM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stem Holdings and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM and Stem Holdings 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 Stem Holdings are associated (or correlated) with BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Stem Holdings i.e., Stem Holdings and BZAM go up and down completely randomly.
Pair Corralation between Stem Holdings and BZAM
Given the investment horizon of 90 days Stem Holdings is expected to generate 0.82 times more return on investment than BZAM. However, Stem Holdings is 1.21 times less risky than BZAM. It trades about 0.07 of its potential returns per unit of risk. BZAM is currently generating about 0.05 per unit of risk. If you would invest 2.10 in Stem Holdings on August 29, 2024 and sell it today you would lose (1.10) from holding Stem Holdings or give up 52.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Stem Holdings vs. BZAM
Performance |
| Timeline |
| Stem Holdings |
| BZAM |
Stem Holdings and BZAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem Holdings and BZAM
The main advantage of trading using opposite Stem Holdings and BZAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem Holdings position performs unexpectedly, BZAM 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 BZAM will offset losses from the drop in BZAM's long position.| Stem Holdings vs. Orchid Ventures | Stem Holdings vs. TransCanna Holdings | Stem Holdings vs. BioQuest Corp | Stem Holdings vs. Item 9 Labs |
| BZAM vs. Southwest Gas Holdings | BZAM vs. WEC Energy Group | BZAM vs. Topbuild Corp | BZAM vs. CenterPoint Energy |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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