Correlation Between Neinor Homes and BlackRock

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

By analyzing existing cross correlation between Neinor Homes SA and BlackRock, you can compare the effects of market volatilities on Neinor Homes and BlackRock 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 Neinor Homes with a short position of BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and BlackRock.

Diversification Opportunities for Neinor Homes and BlackRock

0.85

Correlation Coefficient

Neinor Homes  BlackRock

Very poor diversification

The 3 months correlation between Neinor and BlackRock is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Neinor Homes i.e., Neinor Homes and BlackRock go up and down completely randomly.

Pair Corralation between Neinor Homes and BlackRock

Assuming the 90 days trading horizon Neinor Homes is expected to generate 1.28 times less return on investment than BlackRock. In addition to that, Neinor Homes is 1.21 times more volatile than BlackRock. It trades about 0.15 of its total potential returns per unit of risk. BlackRock is currently generating about 0.24 per unit of volatility. If you would invest  80,967  in BlackRock on August 31, 2024 and sell it today you would earn a total of  17,053  from holding BlackRock or generate 21.06% return on investment over 90 days.

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

Neinor Homes SA  vs.  BlackRock

Neinor Homes SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Neinor Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

BlackRock

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BlackRock reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neinor Homes and BlackRock

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

The idea behind Neinor Homes SA and BlackRock 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.