Correlation Between BLZ and Ethereum PoW

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

By analyzing existing cross correlation between BLZ and Ethereum PoW, you can compare the effects of market volatilities on BLZ and Ethereum PoW 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 BLZ with a short position of Ethereum PoW. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and Ethereum PoW.

Diversification Opportunities for BLZ and Ethereum PoW

0.77

Correlation Coefficient

BLZ  Ethereum PoW

Poor diversification

The 3 months correlation between BLZ and Ethereum is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and Ethereum PoW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum PoW and BLZ 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 BLZ are associated (or correlated) with Ethereum PoW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum PoW has no effect on the direction of BLZ i.e., BLZ and Ethereum PoW go up and down completely randomly.

Pair Corralation between BLZ and Ethereum PoW

Assuming the 90 days trading horizon BLZ is expected to generate 2.33 times more return on investment than Ethereum PoW. However, BLZ is 2.33 times more volatile than Ethereum PoW. It trades about 0.0 of its potential returns per unit of risk. Ethereum PoW is currently generating about -0.16 per unit of risk. If you would invest  5.40  in BLZ on December 30, 2024 and sell it today you would lose (2.10) from holding BLZ or give up 38.89% of portfolio value over 90 days.

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

BLZ  vs.  Ethereum PoW

BLZ

Risk-Adjusted Performance

Very Weak

Over the last 90 days BLZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BLZ is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ethereum PoW

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethereum PoW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Ethereum PoW shareholders.

Pair Trading with BLZ and Ethereum PoW

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

The idea behind BLZ and Ethereum PoW 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.