Correlation Between Country Club and Blue Jet

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

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

Diversification Opportunities for Country Club and Blue Jet

-0.68

Correlation Coefficient

Country Club  Blue Jet

Excellent diversification

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

Pair Corralation between Country Club and Blue Jet

Assuming the 90 days trading horizon Country Club Hospitality is expected to under-perform the Blue Jet. But the stock apears to be less risky and, when comparing its historical volatility, Country Club Hospitality is 1.1 times less risky than Blue Jet. The stock trades about -0.12 of its potential returns per unit of risk. The Blue Jet Healthcare is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  54,995  in Blue Jet Healthcare on November 20, 2024 and sell it today you would earn a total of  20,435  from holding Blue Jet Healthcare or generate 37.16% return on investment over 90 days.

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

Country Club Hospitality  vs.  Blue Jet Healthcare

Country Club Hospitality

Risk-Adjusted Performance

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Blue Jet Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Jet Healthcare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking indicators, Blue Jet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Country Club and Blue Jet

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

The idea behind Country Club Hospitality and Blue Jet Healthcare 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.