Correlation Between BlackRock MIT and Auburn Bancorp

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

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

Diversification Opportunities for BlackRock MIT and Auburn Bancorp

0.04

Correlation Coefficient

BlackRock MIT  Auburn Bancorp

Significant diversification

The 3 months correlation between BlackRock and Auburn is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock MIT II and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn Bancorp and BlackRock MIT 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 MIT II are associated (or correlated) with Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of BlackRock MIT i.e., BlackRock MIT and Auburn Bancorp go up and down completely randomly.

Pair Corralation between BlackRock MIT and Auburn Bancorp

Considering the 90-day investment horizon BlackRock MIT is expected to generate 1.91 times less return on investment than Auburn Bancorp. But when comparing it to its historical volatility, BlackRock MIT II is 4.22 times less risky than Auburn Bancorp. It trades about 0.11 of its potential returns per unit of risk. Auburn Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  851.00  in Auburn Bancorp on December 21, 2024 and sell it today you would earn a total of  49.00  from holding Auburn Bancorp or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

BlackRock MIT II  vs.  Auburn Bancorp

BlackRock MIT II

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock MIT II are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. 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.

Auburn Bancorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Auburn Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BlackRock MIT and Auburn Bancorp

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

The idea behind BlackRock MIT II and Auburn Bancorp 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.