Correlation Between CARV and BLZ

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

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

Diversification Opportunities for CARV and BLZ

0.68

Correlation Coefficient

CARV  BLZ

Poor diversification

The 3 months correlation between CARV and BLZ is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CARV and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and CARV 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 CARV are associated (or correlated) with BLZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLZ has no effect on the direction of CARV i.e., CARV and BLZ go up and down completely randomly.

Pair Corralation between CARV and BLZ

Assuming the 90 days trading horizon CARV is expected to under-perform the BLZ. But the crypto coin apears to be less risky and, when comparing its historical volatility, CARV is 1.45 times less risky than BLZ. The crypto coin trades about -0.14 of its potential returns per unit of risk. The BLZ is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6.75  in BLZ on December 20, 2024 and sell it today you would lose (3.05) from holding BLZ or give up 45.19% of portfolio value over 90 days.

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

CARV  vs.  BLZ

CARV

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARV 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 CARV shareholders.

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 latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for BLZ shareholders.

Pair Trading with CARV and BLZ

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

The idea behind CARV and BLZ 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.