Correlation Between Alfa SAB and BlackRock

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

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

Diversification Opportunities for Alfa SAB and BlackRock

0.28

Correlation Coefficient

Alfa SAB  BlackRock

Modest diversification

The 3 months correlation between Alfa and BlackRock is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alfa SAB de and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Alfa SAB 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 Alfa SAB de 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 Alfa SAB i.e., Alfa SAB and BlackRock go up and down completely randomly.

Pair Corralation between Alfa SAB and BlackRock

Assuming the 90 days trading horizon Alfa SAB is expected to generate 1.5 times less return on investment than BlackRock. In addition to that, Alfa SAB is 1.33 times more volatile than BlackRock. It trades about 0.03 of its total potential returns per unit of risk. BlackRock is currently generating about 0.07 per unit of volatility. If you would invest  1,333,245  in BlackRock on October 13, 2024 and sell it today you would earn a total of  705,434  from holding BlackRock or generate 52.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Alfa SAB de  vs.  BlackRock

Alfa SAB de

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa SAB de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Alfa SAB is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BlackRock

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alfa SAB and BlackRock

The main advantage of trading using opposite Alfa SAB and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa SAB 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 Alfa SAB de 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 Stocks Directory module to find actively traded stocks across global markets.