Correlation Between Compound and BLZ

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

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

Diversification Opportunities for Compound and BLZ

0.74

Correlation Coefficient

Compound  BLZ

Poor diversification

The 3 months correlation between Compound and BLZ is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Compound and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and Compound 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 Compound 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 Compound i.e., Compound and BLZ go up and down completely randomly.

Pair Corralation between Compound and BLZ

Assuming the 90 days trading horizon Compound is expected to under-perform the BLZ. But the crypto coin apears to be less risky and, when comparing its historical volatility, Compound is 2.38 times less risky than BLZ. The crypto coin trades about -0.16 of its potential returns per unit of risk. The BLZ is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5.66  in BLZ on December 22, 2024 and sell it today you would lose (2.14) from holding BLZ or give up 37.81% of portfolio value over 90 days.

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

Compound  vs.  BLZ

Compound

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compound 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 Compound 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 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.

Pair Trading with Compound and BLZ

The main advantage of trading using opposite Compound and BLZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compound 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 Compound 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..