Correlation Between BLZ and Gas

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

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

Diversification Opportunities for BLZ and Gas

0.64

Correlation Coefficient

BLZ  Gas

Poor diversification

The 3 months correlation between BLZ and Gas is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gas and BLZ 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 BLZ are associated (or correlated) with Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gas has no effect on the direction of BLZ i.e., BLZ and Gas go up and down completely randomly.

Pair Corralation between BLZ and Gas

Assuming the 90 days trading horizon BLZ is expected to generate 1.27 times more return on investment than Gas. However, BLZ is 1.27 times more volatile than Gas. It trades about 0.07 of its potential returns per unit of risk. Gas is currently generating about 0.01 per unit of risk. If you would invest  3.31  in BLZ on April 21, 2025 and sell it today you would earn a total of  0.46  from holding BLZ or generate 13.9% return on investment over 90 days.

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

BLZ  vs.  Gas

BLZ

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BLZ are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BLZ exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gas is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BLZ and Gas

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

The idea behind BLZ and Gas 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.