Correlation Between Yerbae Brands and Bluestone Resources

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

By analyzing existing cross correlation between Yerbae Brands Corp and Bluestone Resources, you can compare the effects of market volatilities on Yerbae Brands and Bluestone Resources 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 Yerbae Brands with a short position of Bluestone Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yerbae Brands and Bluestone Resources.

Diversification Opportunities for Yerbae Brands and Bluestone Resources

0.36

Correlation Coefficient

Yerbae Brands  Bluestone Resources

Weak diversification

The 3 months correlation between Yerbae and Bluestone is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Yerbae Brands Corp and Bluestone Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluestone Resources and Yerbae Brands 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 Yerbae Brands Corp are associated (or correlated) with Bluestone Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluestone Resources has no effect on the direction of Yerbae Brands i.e., Yerbae Brands and Bluestone Resources go up and down completely randomly.

Pair Corralation between Yerbae Brands and Bluestone Resources

Assuming the 90 days trading horizon Yerbae Brands Corp is expected to under-perform the Bluestone Resources. But the stock apears to be less risky and, when comparing its historical volatility, Yerbae Brands Corp is 1.07 times less risky than Bluestone Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Bluestone Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Bluestone Resources on October 4, 2024 and sell it today you would lose (27.00) from holding Bluestone Resources or give up 45.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.76%
Values	Daily Returns

Yerbae Brands Corp  vs.  Bluestone Resources

Yerbae Brands Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yerbae Brands Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Yerbae Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Bluestone Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluestone Resources 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 fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Yerbae Brands and Bluestone Resources

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

The idea behind Yerbae Brands Corp and Bluestone Resources 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.