Correlation Between BLUEFLY INC and BIGSTAR ENTERTAINMENT

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

Diversification Opportunities for BLUEFLY INC and BIGSTAR ENTERTAINMENT

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BLUEFLY and BIGSTAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BLUEFLY INC and BIGSTAR ENTERTAINMENT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIGSTAR ENTERTAINMENT INC and BLUEFLY INC 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 BLUEFLY INC are associated (or correlated) with BIGSTAR ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIGSTAR ENTERTAINMENT INC has no effect on the direction of BLUEFLY INC i.e., BLUEFLY INC and BIGSTAR ENTERTAINMENT go up and down completely randomly.

Pair Corralation between BLUEFLY INC and BIGSTAR ENTERTAINMENT

If you would invest (100.00)  in BIGSTAR ENTERTAINMENT INC on February 26, 2022 and sell it today you would earn a total of  100.00  from holding BIGSTAR ENTERTAINMENT INC or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BLUEFLY INC  vs.  BIGSTAR ENTERTAINMENT INC

 Performance (%) 
      Timeline 
BLUEFLY INC 
BLUEFLY Performance
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Over the last 90 days BLUEFLY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLUEFLY INC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
BIGSTAR ENTERTAINMENT INC 
BIGSTAR Performance
0 of 100
Over the last 90 days BIGSTAR ENTERTAINMENT INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BIGSTAR ENTERTAINMENT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BLUEFLY INC and BIGSTAR ENTERTAINMENT Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with BLUEFLY INC and BIGSTAR ENTERTAINMENT

The main advantage of trading using opposite BLUEFLY INC and BIGSTAR ENTERTAINMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUEFLY INC position performs unexpectedly, BIGSTAR ENTERTAINMENT 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 BIGSTAR ENTERTAINMENT will offset losses from the drop in BIGSTAR ENTERTAINMENT's long position.
The idea behind BLUEFLY INC and BIGSTAR ENTERTAINMENT INC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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