Correlation Between Alphabet and Blueharbor Bank

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

By analyzing existing cross correlation between Alphabet Inc Class C and Blueharbor Bank, you can compare the effects of market volatilities on Alphabet and Blueharbor Bank 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 Alphabet with a short position of Blueharbor Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Blueharbor Bank.

Diversification Opportunities for Alphabet and Blueharbor Bank

-0.93

Correlation Coefficient

Alphabet  Blueharbor Bank

Pay attention - limited upside

The 3 months correlation between Alphabet and Blueharbor is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Blueharbor Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blueharbor Bank and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Blueharbor Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blueharbor Bank has no effect on the direction of Alphabet i.e., Alphabet and Blueharbor Bank go up and down completely randomly.

Pair Corralation between Alphabet and Blueharbor Bank

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.34 times more return on investment than Blueharbor Bank. However, Alphabet is 1.34 times more volatile than Blueharbor Bank. It trades about 0.19 of its potential returns per unit of risk. Blueharbor Bank is currently generating about -0.16 per unit of risk. If you would invest  14,220  in Alphabet Inc Class C on February 18, 2024 and sell it today you would earn a total of  3,509  from holding Alphabet Inc Class C or generate 24.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Alphabet Inc Class C  vs.  Blueharbor Bank

Alphabet Class C

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Blueharbor Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blueharbor Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alphabet and Blueharbor Bank

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

The idea behind Alphabet Inc Class C and Blueharbor Bank 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..