Correlation Between BLZ and Magic

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

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

Diversification Opportunities for BLZ and Magic

0.54

Correlation Coefficient

BLZ  Magic

Very weak diversification

The 3 months correlation between BLZ and Magic is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and Magic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic 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 Magic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic has no effect on the direction of BLZ i.e., BLZ and Magic go up and down completely randomly.

Pair Corralation between BLZ and Magic

Assuming the 90 days trading horizon BLZ is expected to under-perform the Magic. In addition to that, BLZ is 1.04 times more volatile than Magic. It trades about -0.06 of its total potential returns per unit of risk. Magic is currently generating about -0.03 per unit of volatility. If you would invest  82.00  in Magic on October 24, 2024 and sell it today you would lose (43.00) from holding Magic or give up 52.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	67.57%
Values	Daily Returns

BLZ  vs.  Magic

BLZ

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for BLZ shareholders.

Magic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Magic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BLZ and Magic

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

The idea behind BLZ and Magic 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.