Correlation Between BLZ and NMC

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Can any of the company-specific risk be diversified away by investing in both BLZ and NMC 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 NMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLZ and NMC, you can compare the effects of market volatilities on BLZ and NMC 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 NMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and NMC.

Diversification Opportunities for BLZ and NMC

0.02
  Correlation Coefficient
 BLZ
 NMC

Significant diversification

The 3 months correlation between BLZ and NMC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and NMC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMC 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 NMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMC has no effect on the direction of BLZ i.e., BLZ and NMC go up and down completely randomly.

Pair Corralation between BLZ and NMC

Assuming the 90 days trading horizon BLZ is expected to generate 1.49 times less return on investment than NMC. In addition to that, BLZ is 1.82 times more volatile than NMC. It trades about 0.07 of its total potential returns per unit of risk. NMC is currently generating about 0.18 per unit of volatility. If you would invest  98.00  in NMC on April 21, 2025 and sell it today you would earn a total of  29.00  from holding NMC or generate 29.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BLZ  vs.  NMC

 Performance 
       Timeline  
BLZ 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
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.
NMC 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in NMC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, NMC exhibited solid returns over the last few months and may actually be approaching a breakup point.

BLZ and NMC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BLZ and NMC

The main advantage of trading using opposite BLZ and NMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, NMC 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 NMC will offset losses from the drop in NMC's long position.
The idea behind BLZ and NMC 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.
Check out your portfolio center.
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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