Correlation Between Blue Sail and Wintime Energy

Can any of the company-specific risk be diversified away by investing in both Blue Sail and Wintime Energy 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 Sail and Wintime Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Sail Medical and Wintime Energy Co, you can compare the effects of market volatilities on Blue Sail and Wintime Energy 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 Sail with a short position of Wintime Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sail and Wintime Energy.

Diversification Opportunities for Blue Sail and Wintime Energy

0.65

Correlation Coefficient

Blue Sail  Wintime Energy

Poor diversification

The 3 months correlation between Blue and Wintime is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sail Medical and Wintime Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintime Energy and Blue Sail 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 Sail Medical are associated (or correlated) with Wintime Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintime Energy has no effect on the direction of Blue Sail i.e., Blue Sail and Wintime Energy go up and down completely randomly.

Pair Corralation between Blue Sail and Wintime Energy

Assuming the 90 days trading horizon Blue Sail Medical is expected to under-perform the Wintime Energy. But the stock apears to be less risky and, when comparing its historical volatility, Blue Sail Medical is 1.1 times less risky than Wintime Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Wintime Energy Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Wintime Energy Co on October 3, 2024 and sell it today you would earn a total of  19.00  from holding Wintime Energy Co or generate 11.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blue Sail Medical  vs.  Wintime Energy Co

Blue Sail Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Sail Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Wintime Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wintime Energy Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wintime Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Sail and Wintime Energy

The main advantage of trading using opposite Blue Sail and Wintime Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Sail position performs unexpectedly, Wintime Energy 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 Wintime Energy will offset losses from the drop in Wintime Energy's long position.

The idea behind Blue Sail Medical and Wintime Energy Co 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.