Correlation Between Pace International and Blue Current

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

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

Diversification Opportunities for Pace International and Blue Current

0.75

Correlation Coefficient

Pace International  Blue Current

Poor diversification

The 3 months correlation between Pace and BLUE is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Blue Current Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Current Global and Pace International 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 Pace International Emerging are associated (or correlated) with Blue Current. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Current Global has no effect on the direction of Pace International i.e., Pace International and Blue Current go up and down completely randomly.

Pair Corralation between Pace International and Blue Current

Assuming the 90 days horizon Pace International is expected to generate 1.04 times less return on investment than Blue Current. In addition to that, Pace International is 1.33 times more volatile than Blue Current Global. It trades about 0.1 of its total potential returns per unit of risk. Blue Current Global is currently generating about 0.14 per unit of volatility. If you would invest  1,556  in Blue Current Global on December 28, 2024 and sell it today you would earn a total of  98.00  from holding Blue Current Global or generate 6.3% return on investment over 90 days.

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

Pace International Emerging  vs.  Blue Current Global

Pace International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace International Emerging are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Pace International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Blue Current Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Current Global are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Blue Current may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pace International and Blue Current

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

The idea behind Pace International Emerging and Blue Current Global 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.