Correlation Between BlackRock MIT and Katahdin Bankshares

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

Diversification Opportunities for BlackRock MIT and Katahdin Bankshares

-0.39

Correlation Coefficient

BlackRock MIT  Katahdin Bankshares

Very good diversification

The 3 months correlation between BlackRock and Katahdin is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock MIT II and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp 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 Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of BlackRock MIT i.e., BlackRock MIT and Katahdin Bankshares go up and down completely randomly.

Pair Corralation between BlackRock MIT and Katahdin Bankshares

Considering the 90-day investment horizon BlackRock MIT is expected to generate 2.26 times less return on investment than Katahdin Bankshares. But when comparing it to its historical volatility, BlackRock MIT II is 2.59 times less risky than Katahdin Bankshares. It trades about 0.04 of its potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,055  in Katahdin Bankshares Corp on October 24, 2024 and sell it today you would earn a total of  297.00  from holding Katahdin Bankshares Corp or generate 14.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.1%
Values	Daily Returns

BlackRock MIT II  vs.  Katahdin Bankshares Corp

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.

Katahdin Bankshares Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Katahdin Bankshares Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Katahdin Bankshares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock MIT and Katahdin Bankshares

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

The idea behind BlackRock MIT II and Katahdin Bankshares Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.