Correlation Between Blrc Sgy and Cref Inflation

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

By analyzing existing cross correlation between Blrc Sgy Mnp and Cref Inflation Linked Bond, you can compare the effects of market volatilities on Blrc Sgy and Cref Inflation 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 Blrc Sgy with a short position of Cref Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blrc Sgy and Cref Inflation.

Diversification Opportunities for Blrc Sgy and Cref Inflation

0.66

Correlation Coefficient

Blrc Sgy  Cref Inflation

Poor diversification

The 3 months correlation between Blrc and Cref is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Blrc Sgy Mnp and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked and Blrc Sgy 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 Blrc Sgy Mnp are associated (or correlated) with Cref Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Blrc Sgy i.e., Blrc Sgy and Cref Inflation go up and down completely randomly.

Pair Corralation between Blrc Sgy and Cref Inflation

Assuming the 90 days horizon Blrc Sgy Mnp is expected to under-perform the Cref Inflation. In addition to that, Blrc Sgy is 1.82 times more volatile than Cref Inflation Linked Bond. It trades about -0.3 of its total potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about -0.22 per unit of volatility. If you would invest  8,559  in Cref Inflation Linked Bond on October 12, 2024 and sell it today you would lose (66.00) from holding Cref Inflation Linked Bond or give up 0.77% of portfolio value over 90 days.

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

Blrc Sgy Mnp  vs.  Cref Inflation Linked Bond

Blrc Sgy Mnp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blrc Sgy Mnp has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blrc Sgy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cref Inflation Linked

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cref Inflation Linked Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Cref Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blrc Sgy and Cref Inflation

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

The idea behind Blrc Sgy Mnp and Cref Inflation Linked Bond 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.