Correlation Between Blue Lagoon and Alphabet

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

By analyzing existing cross correlation between Blue Lagoon Resources and Alphabet Inc Class C, you can compare the effects of market volatilities on Blue Lagoon and Alphabet 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 Lagoon with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Lagoon and Alphabet.

Diversification Opportunities for Blue Lagoon and Alphabet

-0.79

Correlation Coefficient

Blue Lagoon  Alphabet

Pay attention - limited upside

The 3 months correlation between Blue and Alphabet is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Blue Lagoon Resources and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C and Blue Lagoon 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 Lagoon Resources are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of Blue Lagoon i.e., Blue Lagoon and Alphabet go up and down completely randomly.

Pair Corralation between Blue Lagoon and Alphabet

Assuming the 90 days horizon Blue Lagoon Resources is expected to generate 6.02 times more return on investment than Alphabet. However, Blue Lagoon is 6.02 times more volatile than Alphabet Inc Class C. It trades about 0.13 of its potential returns per unit of risk. Alphabet Inc Class C is currently generating about -0.12 per unit of risk. If you would invest  11.00  in Blue Lagoon Resources on December 20, 2024 and sell it today you would earn a total of  8.00  from holding Blue Lagoon Resources or generate 72.73% return on investment over 90 days.

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

Blue Lagoon Resources  vs.  Alphabet Inc Class C

Blue Lagoon Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Lagoon Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Lagoon reported solid returns over the last few months and may actually be approaching a breakup point.

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Blue Lagoon and Alphabet

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

The idea behind Blue Lagoon Resources and Alphabet Inc Class C 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.