Correlation Between BlackRock MIT and First National

Can any of the company-specific risk be diversified away by investing in both BlackRock MIT and First National 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 First National 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 First National Bank, you can compare the effects of market volatilities on BlackRock MIT and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock MIT and First National.

Diversification Opportunities for BlackRock MIT and First National

0.32

Correlation Coefficient

BlackRock MIT  First National

Weak diversification

The 3 months correlation between BlackRock and First is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock MIT II and First National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Bank 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Bank has no effect on the direction of BlackRock MIT i.e., BlackRock MIT and First National go up and down completely randomly.

Pair Corralation between BlackRock MIT and First National

Considering the 90-day investment horizon BlackRock MIT is expected to generate 4.03 times less return on investment than First National. But when comparing it to its historical volatility, BlackRock MIT II is 2.61 times less risky than First National. It trades about 0.02 of its potential returns per unit of risk. First National Bank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  22,997  in First National Bank on December 20, 2024 and sell it today you would earn a total of  396.00  from holding First National Bank or generate 1.72% return on investment over 90 days.

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

BlackRock MIT II  vs.  First National Bank

BlackRock MIT II

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock MIT II are ranked lower than 1 (%) 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.

First National Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First National Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, First National is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BlackRock MIT and First National

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

The idea behind BlackRock MIT II and First National Bank 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.