Correlation Between Deluxe and Blue Sphere
Can any of the company-specific risk be diversified away by investing in both Deluxe and Blue Sphere 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 Deluxe and Blue Sphere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe and Blue Sphere Corp, you can compare the effects of market volatilities on Deluxe and Blue Sphere 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 Deluxe with a short position of Blue Sphere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and Blue Sphere.
Diversification Opportunities for Deluxe and Blue Sphere
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Deluxe and Blue is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and Blue Sphere Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Sphere Corp and Deluxe 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 Deluxe are associated (or correlated) with Blue Sphere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Sphere Corp has no effect on the direction of Deluxe i.e., Deluxe and Blue Sphere go up and down completely randomly.
Pair Corralation between Deluxe and Blue Sphere
Considering the 90-day investment horizon Deluxe is expected to under-perform the Blue Sphere. But the stock apears to be less risky and, when comparing its historical volatility, Deluxe is 153.43 times less risky than Blue Sphere. The stock trades about -0.15 of its potential returns per unit of risk. The Blue Sphere Corp is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Blue Sphere Corp on November 15, 2024 and sell it today you would lose (0.01) from holding Blue Sphere Corp or give up 100.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.31% |
Values | Daily Returns |
Deluxe vs. Blue Sphere Corp
Performance |
Timeline |
Deluxe |
Blue Sphere Corp |
Deluxe and Blue Sphere Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Deluxe and Blue Sphere
The main advantage of trading using opposite Deluxe and Blue Sphere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe position performs unexpectedly, Blue Sphere 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 Sphere will offset losses from the drop in Blue Sphere's long position.Deluxe vs. Criteo Sa | ||
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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