Correlation Between Silver Castle and Blender Financial

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

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

Diversification Opportunities for Silver Castle and Blender Financial

0.15

Correlation Coefficient

Silver Castle  Blender Financial

Average diversification

The 3 months correlation between Silver and Blender is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Silver Castle Holdings and Blender Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blender Financial and Silver Castle 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 Silver Castle Holdings are associated (or correlated) with Blender Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blender Financial has no effect on the direction of Silver Castle i.e., Silver Castle and Blender Financial go up and down completely randomly.

Pair Corralation between Silver Castle and Blender Financial

Assuming the 90 days trading horizon Silver Castle Holdings is expected to generate 0.86 times more return on investment than Blender Financial. However, Silver Castle Holdings is 1.16 times less risky than Blender Financial. It trades about 0.0 of its potential returns per unit of risk. Blender Financial Technologies is currently generating about -0.12 per unit of risk. If you would invest  61,990  in Silver Castle Holdings on August 30, 2024 and sell it today you would lose (1,170) from holding Silver Castle Holdings or give up 1.89% of portfolio value over 90 days.

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

Silver Castle Holdings  vs.  Blender Financial Technologies

Silver Castle Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Castle Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Silver Castle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blender Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blender Financial Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Silver Castle and Blender Financial

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

The idea behind Silver Castle Holdings and Blender Financial Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.