Correlation Between BlackRock and Invesco

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

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

Diversification Opportunities for BlackRock and Invesco

0.77

Correlation Coefficient

BlackRock  Invesco

Poor diversification

The 3 months correlation between BlackRock and Invesco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco and BlackRock 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 BlackRock are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of BlackRock i.e., BlackRock and Invesco go up and down completely randomly.

Pair Corralation between BlackRock and Invesco

Assuming the 90 days trading horizon BlackRock is expected to generate 0.76 times more return on investment than Invesco. However, BlackRock is 1.31 times less risky than Invesco. It trades about 0.08 of its potential returns per unit of risk. Invesco is currently generating about 0.0 per unit of risk. If you would invest  8,612  in BlackRock on October 21, 2024 and sell it today you would earn a total of  664.00  from holding BlackRock or generate 7.71% return on investment over 90 days.

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

BlackRock  vs.  Invesco

BlackRock

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and Invesco

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

The idea behind BlackRock and Invesco 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.