Correlation Between Oak Ridge and BlackRock MIT

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

By analyzing existing cross correlation between Oak Ridge Financial and BlackRock MIT II, you can compare the effects of market volatilities on Oak Ridge and BlackRock MIT 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 Oak Ridge with a short position of BlackRock MIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and BlackRock MIT.

Diversification Opportunities for Oak Ridge and BlackRock MIT

-0.3

Correlation Coefficient

Oak Ridge  BlackRock MIT

Very good diversification

The 3 months correlation between Oak and BlackRock is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and BlackRock MIT II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock MIT II and Oak Ridge 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 Oak Ridge Financial are associated (or correlated) with BlackRock MIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock MIT II has no effect on the direction of Oak Ridge i.e., Oak Ridge and BlackRock MIT go up and down completely randomly.

Pair Corralation between Oak Ridge and BlackRock MIT

Given the investment horizon of 90 days Oak Ridge Financial is expected to generate 1.04 times more return on investment than BlackRock MIT. However, Oak Ridge is 1.04 times more volatile than BlackRock MIT II. It trades about 0.2 of its potential returns per unit of risk. BlackRock MIT II is currently generating about -0.1 per unit of risk. If you would invest  1,920  in Oak Ridge Financial on October 10, 2024 and sell it today you would earn a total of  155.00  from holding Oak Ridge Financial or generate 8.07% return on investment over 90 days.

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

Oak Ridge Financial  vs.  BlackRock MIT II

Oak Ridge Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BlackRock MIT II

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Oak Ridge and BlackRock MIT

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

The idea behind Oak Ridge Financial and BlackRock MIT II 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.