Correlation Between BLZ and USDD

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

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

Diversification Opportunities for BLZ and USDD

0.31

Correlation Coefficient

BLZ  USDD

Weak diversification

The 3 months correlation between BLZ and USDD is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and USDD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USDD 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 USDD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USDD has no effect on the direction of BLZ i.e., BLZ and USDD go up and down completely randomly.

Pair Corralation between BLZ and USDD

Assuming the 90 days trading horizon BLZ is expected to generate 3.94 times more return on investment than USDD. However, BLZ is 3.94 times more volatile than USDD. It trades about 0.07 of its potential returns per unit of risk. USDD 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

BLZ  vs.  USDD

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.

USDD

Risk-Adjusted Performance

Very Weak

Over the last 90 days USDD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, USDD 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 USDD

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

The idea behind BLZ and USDD 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.