Correlation Between Boot Barn and Blink Charging

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

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

Diversification Opportunities for Boot Barn and Blink Charging

0.05

Correlation Coefficient

Boot Barn  Blink Charging

Significant diversification

The 3 months correlation between Boot and Blink is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Blink Charging Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blink Charging and Boot Barn 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 Boot Barn Holdings are associated (or correlated) with Blink Charging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blink Charging has no effect on the direction of Boot Barn i.e., Boot Barn and Blink Charging go up and down completely randomly.

Pair Corralation between Boot Barn and Blink Charging

Given the investment horizon of 90 days Boot Barn is expected to generate 1.95 times less return on investment than Blink Charging. But when comparing it to its historical volatility, Boot Barn Holdings is 2.81 times less risky than Blink Charging. It trades about 0.31 of its potential returns per unit of risk. Blink Charging Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  260.00  in Blink Charging Co on March 2, 2024 and sell it today you would earn a total of  57.00  from holding Blink Charging Co or generate 21.92% return on investment over 90 days.

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

Boot Barn Holdings  vs.  Blink Charging Co

Boot Barn Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boot Barn Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Boot Barn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Blink Charging

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blink Charging Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Blink Charging may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Boot Barn and Blink Charging

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

The idea behind Boot Barn Holdings and Blink Charging Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.