Correlation Between Blue Star and Shell Plc
Can any of the company-specific risk be diversified away by investing in both Blue Star and Shell Plc 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 Star and Shell Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Star Capital and Shell plc, you can compare the effects of market volatilities on Blue Star and Shell Plc 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 Star with a short position of Shell Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Shell Plc.
Diversification Opportunities for Blue Star and Shell Plc
Significant diversification
The 3 months correlation between Blue and Shell is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and Shell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell plc and Blue Star 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 Star Capital are associated (or correlated) with Shell Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell plc has no effect on the direction of Blue Star i.e., Blue Star and Shell Plc go up and down completely randomly.
Pair Corralation between Blue Star and Shell Plc
Assuming the 90 days trading horizon Blue Star Capital is expected to generate 121.19 times more return on investment than Shell Plc. However, Blue Star is 121.19 times more volatile than Shell plc. It trades about 0.14 of its potential returns per unit of risk. Shell plc is currently generating about 0.08 per unit of risk. If you would invest 400.00 in Blue Star Capital on December 4, 2024 and sell it today you would earn a total of 450.00 from holding Blue Star Capital or generate 112.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Blue Star Capital vs. Shell plc
Performance |
Timeline |
Blue Star Capital |
Shell plc |
Blue Star and Shell Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Blue Star and Shell Plc
The main advantage of trading using opposite Blue Star and Shell Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Star position performs unexpectedly, Shell Plc 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 Shell Plc will offset losses from the drop in Shell Plc's long position.Blue Star vs. Wheaton Precious Metals | Blue Star vs. PPHE Hotel Group | Blue Star vs. Future Metals NL | Blue Star vs. First Class Metals |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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