Correlation Between Black Hills and Vectrus

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

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

Diversification Opportunities for Black Hills and Vectrus

0.0

Correlation Coefficient

Black Hills  Vectrus

Pay attention - limited upside

The 3 months correlation between Black and Vectrus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Vectrus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vectrus 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 Vectrus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vectrus has no effect on the direction of Black Hills i.e., Black Hills and Vectrus go up and down completely randomly.

Pair Corralation between Black Hills and Vectrus

If you would invest  5,731  in Black Hills on December 20, 2024 and sell it today you would earn a total of  331.00  from holding Black Hills or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Black Hills  vs.  Vectrus

Black Hills

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward-looking signals, Black Hills may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vectrus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vectrus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Vectrus is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Black Hills and Vectrus

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

The idea behind Black Hills and Vectrus 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.