Correlation Between TROOPS and Blend Labs

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

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

Diversification Opportunities for TROOPS and Blend Labs

0.54

Correlation Coefficient

TROOPS  Blend Labs

Very weak diversification

The 3 months correlation between TROOPS and Blend is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding TROOPS Inc and Blend Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blend Labs and TROOPS 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 TROOPS Inc are associated (or correlated) with Blend Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blend Labs has no effect on the direction of TROOPS i.e., TROOPS and Blend Labs go up and down completely randomly.

Pair Corralation between TROOPS and Blend Labs

Given the investment horizon of 90 days TROOPS Inc is expected to under-perform the Blend Labs. In addition to that, TROOPS is 1.47 times more volatile than Blend Labs. It trades about -0.2 of its total potential returns per unit of risk. Blend Labs is currently generating about -0.07 per unit of volatility. If you would invest  430.00  in Blend Labs on December 28, 2024 and sell it today you would lose (86.00) from holding Blend Labs or give up 20.0% of portfolio value over 90 days.

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

TROOPS Inc  vs.  Blend Labs

TROOPS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TROOPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Blend Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blend Labs 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with TROOPS and Blend Labs

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

The idea behind TROOPS Inc and Blend Labs 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.