Correlation Between Wrapped Beacon and BLZ
Can any of the company-specific risk be diversified away by investing in both Wrapped Beacon 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 Wrapped Beacon and BLZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Beacon ETH and BLZ, you can compare the effects of market volatilities on Wrapped Beacon 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 Wrapped Beacon with a short position of BLZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Beacon and BLZ.
Diversification Opportunities for Wrapped Beacon and BLZ
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wrapped and BLZ is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Beacon ETH and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and Wrapped Beacon 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 Wrapped Beacon ETH 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 Wrapped Beacon i.e., Wrapped Beacon and BLZ go up and down completely randomly.
Pair Corralation between Wrapped Beacon and BLZ
Assuming the 90 days trading horizon Wrapped Beacon ETH is expected to generate 0.55 times more return on investment than BLZ. However, Wrapped Beacon ETH is 1.82 times less risky than BLZ. It trades about -0.01 of its potential returns per unit of risk. BLZ is currently generating about -0.11 per unit of risk. If you would invest 357,649 in Wrapped Beacon ETH on November 5, 2024 and sell it today you would lose (8,394) from holding Wrapped Beacon ETH or give up 2.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Beacon ETH vs. BLZ
Performance |
| Timeline |
| Wrapped Beacon ETH |
| BLZ |
Wrapped Beacon and BLZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Beacon and BLZ
The main advantage of trading using opposite Wrapped Beacon and BLZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Beacon 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.| Wrapped Beacon vs. Wrapped eETH | Wrapped Beacon vs. Staked Ether | Wrapped Beacon vs. Phala Network | Wrapped Beacon vs. EigenLayer |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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