Correlation Between BLZ and YFII

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

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

Diversification Opportunities for BLZ and YFII

0.62

Correlation Coefficient

BLZ  YFII

Poor diversification

The 3 months correlation between BLZ and YFII is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and YFII in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YFII 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 YFII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YFII has no effect on the direction of BLZ i.e., BLZ and YFII go up and down completely randomly.

Pair Corralation between BLZ and YFII

Assuming the 90 days trading horizon BLZ is expected to generate 2.95 times more return on investment than YFII. However, BLZ is 2.95 times more volatile than YFII. It trades about 0.0 of its potential returns per unit of risk. YFII is currently generating about -0.03 per unit of risk. If you would invest  5.40  in BLZ on December 29, 2024 and sell it today you would lose (2.08) from holding BLZ or give up 38.52% of portfolio value over 90 days.

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

BLZ  vs.  YFII

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.

YFII

Risk-Adjusted Performance

Very Weak

Over the last 90 days YFII has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for YFII shareholders.

Pair Trading with BLZ and YFII

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

The idea behind BLZ and YFII 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.