Correlation Between Blkrk Lc and The Merger

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

By analyzing existing cross correlation between Blkrk Lc Cr and The Merger Fund, you can compare the effects of market volatilities on Blkrk Lc and The Merger 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 Blkrk Lc with a short position of The Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blkrk Lc and The Merger.

Diversification Opportunities for Blkrk Lc and The Merger

0.93

Correlation Coefficient

Blkrk Lc  The Merger

Almost no diversification

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

Pair Corralation between Blkrk Lc and The Merger

Assuming the 90 days horizon Blkrk Lc is expected to generate 1.36 times less return on investment than The Merger. But when comparing it to its historical volatility, Blkrk Lc Cr is 1.38 times less risky than The Merger. It trades about 0.21 of its potential returns per unit of risk. The Merger Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,706  in The Merger Fund on December 27, 2024 and sell it today you would earn a total of  44.00  from holding The Merger Fund or generate 2.58% return on investment over 90 days.

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

Blkrk Lc Cr  vs.  The Merger Fund

Blkrk Lc Cr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blkrk Lc Cr are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blkrk Lc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Merger Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Merger Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, The Merger is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blkrk Lc and The Merger

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

The idea behind Blkrk Lc Cr and The Merger Fund 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.