Correlation Between BLAC Old and Hawkins

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

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

Diversification Opportunities for BLAC Old and Hawkins

0.18

Correlation Coefficient

BLAC Old  Hawkins

Average diversification

The 3 months correlation between BLAC and Hawkins is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BLAC Old and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and BLAC Old 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 BLAC Old are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of BLAC Old i.e., BLAC Old and Hawkins go up and down completely randomly.

Pair Corralation between BLAC Old and Hawkins

Given the investment horizon of 90 days BLAC Old is expected to under-perform the Hawkins. In addition to that, BLAC Old is 5.17 times more volatile than Hawkins. It trades about -0.22 of its total potential returns per unit of risk. Hawkins is currently generating about -0.09 per unit of volatility. If you would invest  12,344  in Hawkins on December 29, 2024 and sell it today you would lose (1,688) from holding Hawkins or give up 13.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	54.1%
Values	Daily Returns

BLAC Old  vs.  Hawkins

BLAC Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days BLAC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hawkins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BLAC Old and Hawkins

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

The idea behind BLAC Old and Hawkins 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.