Correlation Between US Financial and Blue Sky

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

By analyzing existing cross correlation between US Financial 15 and Blue Sky Uranium, you can compare the effects of market volatilities on US Financial and Blue Sky 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 US Financial with a short position of Blue Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Blue Sky.

Diversification Opportunities for US Financial and Blue Sky

0.2

Correlation Coefficient

US Financial  Blue Sky

Modest diversification

The 3 months correlation between FTU-PB and Blue is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Blue Sky Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Sky Uranium and US Financial 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 US Financial 15 are associated (or correlated) with Blue Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Sky Uranium has no effect on the direction of US Financial i.e., US Financial and Blue Sky go up and down completely randomly.

Pair Corralation between US Financial and Blue Sky

Assuming the 90 days trading horizon US Financial 15 is expected to generate 0.28 times more return on investment than Blue Sky. However, US Financial 15 is 3.59 times less risky than Blue Sky. It trades about 0.06 of its potential returns per unit of risk. Blue Sky Uranium is currently generating about -0.07 per unit of risk. If you would invest  738.00  in US Financial 15 on December 27, 2024 and sell it today you would earn a total of  42.00  from holding US Financial 15 or generate 5.69% return on investment over 90 days.

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

US Financial 15  vs.  Blue Sky Uranium

US Financial 15

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, US Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Blue Sky Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Sky Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with US Financial and Blue Sky

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

The idea behind US Financial 15 and Blue Sky Uranium 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.