Correlation Between Black Hills and Beneficient

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

By analyzing existing cross correlation between Black Hills and Beneficient Class A, you can compare the effects of market volatilities on Black Hills and Beneficient 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 Black Hills with a short position of Beneficient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Beneficient.

Diversification Opportunities for Black Hills and Beneficient

-0.2

Correlation Coefficient

Black Hills  Beneficient

Good diversification

The 3 months correlation between Black and Beneficient is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Beneficient Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beneficient Class and Black Hills 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 Black Hills are associated (or correlated) with Beneficient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beneficient Class has no effect on the direction of Black Hills i.e., Black Hills and Beneficient go up and down completely randomly.

Pair Corralation between Black Hills and Beneficient

Considering the 90-day investment horizon Black Hills is expected to generate 0.06 times more return on investment than Beneficient. However, Black Hills is 16.54 times less risky than Beneficient. It trades about 0.04 of its potential returns per unit of risk. Beneficient Class A is currently generating about -0.02 per unit of risk. If you would invest  5,152  in Black Hills on October 7, 2024 and sell it today you would earn a total of  627.00  from holding Black Hills or generate 12.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Black Hills  vs.  Beneficient Class A

Black Hills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Hills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Beneficient Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beneficient Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Black Hills and Beneficient

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

The idea behind Black Hills and Beneficient Class A 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.