Correlation Between Computer Direct and Blender Financial

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

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

Diversification Opportunities for Computer Direct and Blender Financial

-0.56

Correlation Coefficient

Computer Direct  Blender Financial

Excellent diversification

The 3 months correlation between Computer and Blender is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Computer Direct and Blender Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blender Financial and Computer Direct 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 Computer Direct are associated (or correlated) with Blender Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blender Financial has no effect on the direction of Computer Direct i.e., Computer Direct and Blender Financial go up and down completely randomly.

Pair Corralation between Computer Direct and Blender Financial

Assuming the 90 days trading horizon Computer Direct is expected to under-perform the Blender Financial. But the stock apears to be less risky and, when comparing its historical volatility, Computer Direct is 1.83 times less risky than Blender Financial. The stock trades about -0.25 of its potential returns per unit of risk. The Blender Financial Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  38,330  in Blender Financial Technologies on October 27, 2024 and sell it today you would earn a total of  3,110  from holding Blender Financial Technologies or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Computer Direct  vs.  Blender Financial Technologies

Computer Direct

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Direct are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Computer Direct sustained solid returns over the last few months and may actually be approaching a breakup point.

Blender Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blender Financial Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Blender Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Direct and Blender Financial

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

The idea behind Computer Direct and Blender Financial Technologies 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.