Correlation Between Blue World and Inception Growth

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

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

Diversification Opportunities for Blue World and Inception Growth

-0.35

Correlation Coefficient

Blue World  Inception Growth

Very good diversification

The 3 months correlation between Blue and Inception is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Blue World Acquisition and Inception Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inception Growth Acq and Blue World 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 World Acquisition are associated (or correlated) with Inception Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inception Growth Acq has no effect on the direction of Blue World i.e., Blue World and Inception Growth go up and down completely randomly.

Pair Corralation between Blue World and Inception Growth

If you would invest  11.00  in Inception Growth Acquisition on October 9, 2024 and sell it today you would lose (6.00) from holding Inception Growth Acquisition or give up 54.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.0%
Values	Daily Returns

Blue World Acquisition  vs.  Inception Growth Acquisition

Blue World Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Blue World is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Inception Growth Acq

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Inception Growth Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Inception Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue World and Inception Growth

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

The idea behind Blue World Acquisition and Inception Growth Acquisition 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.