Correlation Between Black Hills and 90331HPL1

Can any of the company-specific risk be diversified away by investing in both Black Hills and 90331HPL1 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 90331HPL1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Hills and US BANK NATIONAL, you can compare the effects of market volatilities on Black Hills and 90331HPL1 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 90331HPL1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and 90331HPL1.

Diversification Opportunities for Black Hills and 90331HPL1

0.48

Correlation Coefficient

Black Hills  90331HPL1

Very weak diversification

The 3 months correlation between Black and 90331HPL1 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and US BANK NATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US BANK NATIONAL 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 90331HPL1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US BANK NATIONAL has no effect on the direction of Black Hills i.e., Black Hills and 90331HPL1 go up and down completely randomly.

Pair Corralation between Black Hills and 90331HPL1

Considering the 90-day investment horizon Black Hills is expected to under-perform the 90331HPL1. But the stock apears to be less risky and, when comparing its historical volatility, Black Hills is 71.23 times less risky than 90331HPL1. The stock trades about -0.01 of its potential returns per unit of risk. The US BANK NATIONAL is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,556  in US BANK NATIONAL on October 4, 2024 and sell it today you would lose (9.00) from holding US BANK NATIONAL or give up 0.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.1%
Values	Daily Returns

Black Hills  vs.  US BANK NATIONAL

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.

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US BANK NATIONAL investors.

Pair Trading with Black Hills and 90331HPL1

The main advantage of trading using opposite Black Hills and 90331HPL1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, 90331HPL1 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 90331HPL1 will offset losses from the drop in 90331HPL1's long position.

The idea behind Black Hills and US BANK NATIONAL 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.