Correlation Between BlackRock and Vista Oil

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

By analyzing existing cross correlation between BlackRock and Vista Oil Gas, you can compare the effects of market volatilities on BlackRock and Vista Oil 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 Vista Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and Vista Oil.

Diversification Opportunities for BlackRock and Vista Oil

0.23

Correlation Coefficient

BlackRock  Vista Oil

Modest diversification

The 3 months correlation between BlackRock and Vista is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Vista Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Oil Gas 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 Vista Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Oil Gas has no effect on the direction of BlackRock i.e., BlackRock and Vista Oil go up and down completely randomly.

Pair Corralation between BlackRock and Vista Oil

Assuming the 90 days trading horizon BlackRock is expected to generate 0.6 times more return on investment than Vista Oil. However, BlackRock is 1.66 times less risky than Vista Oil. It trades about -0.06 of its potential returns per unit of risk. Vista Oil Gas is currently generating about -0.09 per unit of risk. If you would invest  2,117,500  in BlackRock on December 5, 2024 and sell it today you would lose (142,500) from holding BlackRock or give up 6.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

BlackRock  vs.  Vista Oil Gas

BlackRock

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vista Oil Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vista Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BlackRock and Vista Oil

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

The idea behind BlackRock and Vista Oil Gas 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.