Correlation Between Cleveland Cliffs and Bella Protocol

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

Diversification Opportunities for Cleveland Cliffs and Bella Protocol

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Cleveland and Bella is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland-Cliffs and Bella Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bella Protocol and Cleveland Cliffs 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 Cleveland-Cliffs are associated (or correlated) with Bella Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bella Protocol has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Bella Protocol go up and down completely randomly.

Pair Corralation between Cleveland Cliffs and Bella Protocol

Considering the 90-day investment horizon Cleveland Cliffs is expected to generate 1.44 times less return on investment than Bella Protocol. But when comparing it to its historical volatility, Cleveland-Cliffs is 2.02 times less risky than Bella Protocol. It trades about 0.08 of its potential returns per unit of risk. Bella Protocol is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Bella Protocol on May 20, 2022 and sell it today you would earn a total of  7.00  from holding Bella Protocol or generate 8.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cleveland-Cliffs  vs.  Bella Protocol

 Performance (%) 
       Timeline  
Cleveland-Cliffs 
Cleveland Performance
0 of 100
Over the last 90 days Cleveland-Cliffs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Cleveland Price Channel

Bella Protocol 
Bella Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bella Protocol are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Bella Protocol sustained solid returns over the last few months and may actually be approaching a breakup point.

Bella Price Channel

Cleveland Cliffs and Bella Protocol Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cleveland Cliffs and Bella Protocol

The main advantage of trading using opposite Cleveland Cliffs and Bella Protocol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs position performs unexpectedly, Bella Protocol 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 Bella Protocol will offset losses from the drop in Bella Protocol's long position.
The idea behind Cleveland-Cliffs and Bella Protocol 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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