Correlation Between ISR and BLZ

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

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

Diversification Opportunities for ISR and BLZ

0.56

Correlation Coefficient

ISR  BLZ

Very weak diversification

The 3 months correlation between ISR and BLZ is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ISR and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and ISR 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 ISR 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 ISR i.e., ISR and BLZ go up and down completely randomly.

Pair Corralation between ISR and BLZ

If you would invest  13.00  in BLZ on September 13, 2024 and sell it today you would earn a total of  4.00  from holding BLZ or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

ISR  vs.  BLZ

ISR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ISR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ISR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BLZ

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BLZ are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BLZ exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ISR and BLZ

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

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..