Correlation Between Blue Sphere and Xcel Energy

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

By analyzing existing cross correlation between Blue Sphere Corp and Xcel Energy, you can compare the effects of market volatilities on Blue Sphere and Xcel Energy 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 Blue Sphere with a short position of Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sphere and Xcel Energy.

Diversification Opportunities for Blue Sphere and Xcel Energy

-0.36

Correlation Coefficient

Blue Sphere  Xcel Energy

Very good diversification

The 3 months correlation between Blue and Xcel is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sphere Corp and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Energy and Blue Sphere 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 Blue Sphere Corp are associated (or correlated) with Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of Blue Sphere i.e., Blue Sphere and Xcel Energy go up and down completely randomly.

Pair Corralation between Blue Sphere and Xcel Energy

Given the investment horizon of 90 days Blue Sphere Corp is expected to generate 264.52 times more return on investment than Xcel Energy. However, Blue Sphere is 264.52 times more volatile than Xcel Energy. It trades about 0.31 of its potential returns per unit of risk. Xcel Energy is currently generating about 0.25 per unit of risk. If you would invest  0.01  in Blue Sphere Corp on July 10, 2025 and sell it today you would lose (0.01) from holding Blue Sphere Corp or give up 99.0% of portfolio value over 90 days.

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

Blue Sphere Corp  vs.  Xcel Energy

Blue Sphere Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Sphere Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Blue Sphere reported solid returns over the last few months and may actually be approaching a breakup point.

Xcel Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xcel Energy are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Xcel Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Sphere and Xcel Energy

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

The idea behind Blue Sphere Corp and Xcel Energy 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 CEOs Directory module to screen CEOs from public companies around the world.