Correlation Between BLZ and SCRT

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

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

Diversification Opportunities for BLZ and SCRT

0.75

Correlation Coefficient

BLZ  SCRT

Poor diversification

The 3 months correlation between BLZ and SCRT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and SCRT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCRT 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 SCRT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCRT has no effect on the direction of BLZ i.e., BLZ and SCRT go up and down completely randomly.

Pair Corralation between BLZ and SCRT

Assuming the 90 days trading horizon BLZ is expected to generate 2.37 times more return on investment than SCRT. However, BLZ is 2.37 times more volatile than SCRT. It trades about 0.0 of its potential returns per unit of risk. SCRT is currently generating about -0.19 per unit of risk. If you would invest  5.40  in BLZ on December 28, 2024 and sell it today you would lose (1.95) from holding BLZ or give up 36.11% of portfolio value over 90 days.

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

BLZ  vs.  SCRT

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.

SCRT

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCRT 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 SCRT shareholders.

Pair Trading with BLZ and SCRT

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

The idea behind BLZ and SCRT 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.