Correlation Between BLK and MEC

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

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

Diversification Opportunities for BLK and MEC

0.0

Correlation Coefficient

BLK  MEC

Pay attention - limited upside

The 3 months correlation between BLK and MEC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BLK and MEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEC and BLK 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 BLK are associated (or correlated) with MEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEC has no effect on the direction of BLK i.e., BLK and MEC go up and down completely randomly.

Pair Corralation between BLK and MEC

If you would invest  1.77  in BLK on August 30, 2024 and sell it today you would earn a total of  1.12  from holding BLK or generate 63.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BLK  vs.  MEC

BLK

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BLK are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, BLK exhibited solid returns over the last few months and may actually be approaching a breakup point.

MEC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MEC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BLK and MEC

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

The idea behind BLK and MEC 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 CEOs Directory module to screen CEOs from public companies around the world.