Correlation Between Blue Chip and Global Social

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

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

Diversification Opportunities for Blue Chip and Global Social

-0.56

Correlation Coefficient

Blue Chip  Global Social

Excellent diversification

The 3 months correlation between Blue and Global is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Blue Chip Growth and Global Social Awareness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Social Awareness and Blue Chip 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 Blue Chip Growth are associated (or correlated) with Global Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Social Awareness has no effect on the direction of Blue Chip i.e., Blue Chip and Global Social go up and down completely randomly.

Pair Corralation between Blue Chip and Global Social

Assuming the 90 days horizon Blue Chip Growth is expected to under-perform the Global Social. In addition to that, Blue Chip is 2.24 times more volatile than Global Social Awareness. It trades about -0.15 of its total potential returns per unit of risk. Global Social Awareness is currently generating about 0.13 per unit of volatility. If you would invest  2,373  in Global Social Awareness on December 28, 2024 and sell it today you would earn a total of  167.00  from holding Global Social Awareness or generate 7.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Blue Chip Growth  vs.  Global Social Awareness

Blue Chip Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Chip Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Global Social Awareness

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Social Awareness are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Social may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Blue Chip and Global Social

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

The idea behind Blue Chip Growth and Global Social Awareness 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.