Correlation Between Black Hills and 62886EAY4

Can any of the company-specific risk be diversified away by investing in both Black Hills and 62886EAY4 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 62886EAY4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Hills and NCR P NEW, you can compare the effects of market volatilities on Black Hills and 62886EAY4 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 62886EAY4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and 62886EAY4.

Diversification Opportunities for Black Hills and 62886EAY4

0.51

Correlation Coefficient

Black Hills  62886EAY4

Very weak diversification

The 3 months correlation between Black and 62886EAY4 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and NCR P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCR P NEW 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 62886EAY4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCR P NEW has no effect on the direction of Black Hills i.e., Black Hills and 62886EAY4 go up and down completely randomly.

Pair Corralation between Black Hills and 62886EAY4

Considering the 90-day investment horizon Black Hills is expected to under-perform the 62886EAY4. In addition to that, Black Hills is 3.85 times more volatile than NCR P NEW. It trades about -0.27 of its total potential returns per unit of risk. NCR P NEW is currently generating about -0.23 per unit of volatility. If you would invest  9,716  in NCR P NEW on October 17, 2024 and sell it today you would lose (128.00) from holding NCR P NEW or give up 1.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Black Hills  vs.  NCR P NEW

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 latest unsteady performance, the Stock's forward-looking signals remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

NCR P NEW

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NCR P NEW are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 62886EAY4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Black Hills and 62886EAY4

The main advantage of trading using opposite Black Hills and 62886EAY4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, 62886EAY4 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 62886EAY4 will offset losses from the drop in 62886EAY4's long position.

The idea behind Black Hills and NCR P NEW 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.